Borderline Tax bracket help

No. This is a common fallacy that people have heard about and misunderstand the actual workings. The increased brackets only apply to the higher income.

Lower income only makes sense (at least generally - I'm sure there are unique situations - Poodlebrain and other experts might be able to clarify), for an individual, if there are some phasing out issues for various credits, deductions or other means tested things. Even then, there is usually a sliding scale to make such gaming counterproductive.

If you're worried about "brackets" increase your tax-deferred retirement contributions - those reduce your taxable income, but you still get the benefit of the earnings. Otherwise, nobody ever went broke making more money.

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So even if we fall into the next bracket by less than $5000, we are not screwing ourselves?

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No - only the amount above the next bracket is taxed at the higher rate - you're still making more money, just at a slower rate of ascent.

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She said "it was actually costing us money for me to work."

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This may have been true - but not because of tax brackets. By the time the average working (and not to be sexist, but generally female) buys a wardrobe, which has to be refreshed constantly, vehicle expenses, child care (at least while the children are young) - that second income has to be fairly decent to break even. I said the same about Mrs. Midnight - that it "cost" me money to send her to work, but not because of tax bracket concerns.

I agree and each to their own on what they want to spend their money on. I was mainly just confused about the tax stuff. I never want to be an idiot and work if it is actually hurting us in the long run because of tax bracket stuff.

Definitely don't worry about going into new bracket...


Say the tax brackets are at 0k-50k (25%), 50k-75k (30%) and 75k-100k (35%)...

If you make 90k you would be taxed:

25% on first 50k
30% on next 25k
35% on next 15k

So if you go just a little bit into a higher bracket, you are only paying the higher taxes on the amount you go into the bracket and not the total. It will push up your effective tax rate, but it doesn't mean you will lose money by working.

From someone in accounting business... quit worrying about the damn brackets. That shouldn't have any impact on whether your work or make a certain amount. Make as much money as you can and save as much as you can (how to save, ask these experts). As far as brackets go, look above for an example and here is taxable income bracket for 2015 for MFJ:

First $18450 x10%
From $18451 to $74900 x15%
From $74901 to $151200 x20%

I'll stop there for example purposes. If you have $100,000 taxable income then you'd owe:
18450 x10% = 1845
56450 x15% = 8467.50
25100 x20% = 5020

Total due = 15332.50

KEEP IN MIND THAT TAXABLE INCOME AND BEFORE CREDITS!!