Welcome to Professor Savings.com
We teach finance basics.
Hi, I’m you’re host today Rayfil Wong
How to calculate how much tax you owe?
Basically, the more you make, the more you are taxes.
Let’s say Abbey here makes $100,000 from her salary as marketing chief for Puppyfood.com
She also made $5000 from interest in a savings account.
Total gross income
$100,000 plus $5000 equals $105,000
Abbey goes to her tax accountant professional and tries to understand the calculations.
Let’s go through an example
Let’s say that standard deduction for single female deduction is $5000
so taxed $105,000 minus $5000 equals $100,000
Abbey’s tax professional finds out that single female filing in 2014 in her bracket pays 28%.
Since we are on marginal tax system we are taxed each dollar over a certain amount
so Abbey’s first $8000 income is taxed differently than her income in $8001 to $35,000.
This is just the basics,again consult your tax professional but understanding the concept will allow
you to create strategies that possibly can lower your income tax.
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