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Tax pros, what's a good effective rate?
Posted on 3/5/18 at 10:10 pm
Posted on 3/5/18 at 10:10 pm
Let's say someone's AGI is $175k, what is a good range to be in for state and fed combined? Can you answer it this way or do you need more info? Just looking for a range of %.
5
Posted on 3/5/18 at 10:17 pm to Sho Nuff
quote:
Tax pros, what's a good effective rate?
Well that depends. It different for every case, but as a general answer, ideally, as low as you can get it. There's no really no way to say with the info you gave, and you are also eliminating qualitative factors here. For example, let's say you are saving for a house. It would be better for you to have a hogher effective rate to be able to put away more cash for said house.
In short, as in most things with tax, it depends.
Posted on 3/5/18 at 10:22 pm to Sho Nuff
Without more info, the range is pretty wide
Posted on 3/5/18 at 10:34 pm to Mingo Was His NameO
What basic info could I give to get a rough idea?
This post was edited on 3/5/18 at 11:31 pm
Posted on 3/6/18 at 12:06 am to Sho Nuff
Are you asking how much should you pay (have deducted from your paycheck) in taxes through out the year to avoid having to pay much in fed or state taxes or get a big refund back when you file?
Just trying to understand what you are asking.
And are you asking for 2018 or 2017? Are you married and filing jointly or single? The marginal rates changed in '18 and they are different for different filing categories.
FYI, you pay taxes on your taxable income which is your AGI minus exemptions (but not in '18 as they went away) and deductions. You want to use the higher of the standard deduction or your itemized deduction cause that will lower your taxable income.
Just trying to understand what you are asking.
And are you asking for 2018 or 2017? Are you married and filing jointly or single? The marginal rates changed in '18 and they are different for different filing categories.
FYI, you pay taxes on your taxable income which is your AGI minus exemptions (but not in '18 as they went away) and deductions. You want to use the higher of the standard deduction or your itemized deduction cause that will lower your taxable income.
Posted on 3/6/18 at 9:20 am to Sho Nuff
Based on the info you had there before your edit, I'd say your effective tax rate is on the high side.
This post was edited on 3/6/18 at 9:21 am
Posted on 3/6/18 at 12:23 pm to Sho Nuff
Are you asking what your rate is? Are you asking if that's a fair tax policy? I'm rather confused as to what your question.
I mean, me, I'd rather make millions and pay 0% effective... that would be "good" lol
I mean, me, I'd rather make millions and pay 0% effective... that would be "good" lol
Posted on 3/6/18 at 12:31 pm to LSUFanHouston
He's trying to figure out in an indirect way if he's taken advantage of all the deductions he should have.
Basic example: Couple makes 175k, but only got taxed on $139 for whatever rate that comes out as. We can indirectly infer that in 2017, they maxed out their 401ks (36,000 total) or some combination thereof.
So for your typical tax situation without anything crazy, what should a couple making 175k at a maximum get taxed on, assuming they took advantage of the basics?
This gets hard of course because property taxes, mortgage etc are so highly variable due to tax rates and consumer choice (a millionaire could buy a 100k house) that any solid number is pretty impossible to come up with once you get pass the "easy" ones.
Basic example: Couple makes 175k, but only got taxed on $139 for whatever rate that comes out as. We can indirectly infer that in 2017, they maxed out their 401ks (36,000 total) or some combination thereof.
So for your typical tax situation without anything crazy, what should a couple making 175k at a maximum get taxed on, assuming they took advantage of the basics?
This gets hard of course because property taxes, mortgage etc are so highly variable due to tax rates and consumer choice (a millionaire could buy a 100k house) that any solid number is pretty impossible to come up with once you get pass the "easy" ones.
This post was edited on 3/6/18 at 12:35 pm
Posted on 3/6/18 at 1:39 pm to Teddy Ruxpin
He posted some details in his second post that he later edited out.
Posted on 3/6/18 at 6:57 pm to castorinho
quote:
Based on the info you had there before your edit, I'd say your effective tax rate is on the high side.
Thank you. I thought so too but wasn't sure.
Posted on 3/7/18 at 8:28 am to Sho Nuff
The effective tax rate on an AGI of $175,000 is 15% with these assumptions:
2017 tax year
Married filing jointly
2 exemptions, yourself and one other, $8,100 (2 X $4,050)
Use the standard deduction, $12,700 for Married filing jointly
$175,000 AGI, line 38 on the 1040.
-$12,700 for standard deduction, line 40 on the 1040
-$8,100 for exemptions, line 42
$154,200, taxable income
Taxes on $154,200 are $25,398
15% = $25,398 / $175,000, but I actually do not know if you should divide by the AGI or your Gross Income to calculate the effective tax rate.
The taxes are calculated from the Married filing jointly tax bracket table.
$1,865, 10% of first $1,8650
$8,588, 15% on the next increment up to $75,900 (.15 X $57,250)
$14,638, 25% on the next increment up to $153,100 (.25 X $77,200)
$308, 28% on the balance, ($154,200 - $153,100 = $1,100 X .28)
Sum the amounts for each bracket to get the $25,398 total taxes due.
That's the calculation unless you have other taxes or credits, lines 57 through 73 on the 1040.
If your itemized deduction are more than $12,700 than your taxable income will be lower and your effective tax rate will be too. Itemized deductions could be higher than standard if you pay a lot in mortgage interest, or property & other taxes, or have a lot of medical expenses, or donate to charities, etc. Look at the Schedule A form to see what is deductible.
If you have more or fewer exemptions or are not married filing jointly then the numbers are different.
2018 will be different than 2017 due to the tax law changes.
Contributions to IRAs, 401K, etc. are factored in before the AGI is determined. See lines 23 - 37 on the 1040.
I am not a tax expert, I just looked at the 1040 and Schedule A forms and googled the tax brackets. This is just federal, I don't know anything about LA state taxes.
I still don't understand the question. Maybe I would if I had seen the part you edited out, but it doesn't matter.
2017 tax year
Married filing jointly
2 exemptions, yourself and one other, $8,100 (2 X $4,050)
Use the standard deduction, $12,700 for Married filing jointly
$175,000 AGI, line 38 on the 1040.
-$12,700 for standard deduction, line 40 on the 1040
-$8,100 for exemptions, line 42
$154,200, taxable income
Taxes on $154,200 are $25,398
15% = $25,398 / $175,000, but I actually do not know if you should divide by the AGI or your Gross Income to calculate the effective tax rate.
The taxes are calculated from the Married filing jointly tax bracket table.
$1,865, 10% of first $1,8650
$8,588, 15% on the next increment up to $75,900 (.15 X $57,250)
$14,638, 25% on the next increment up to $153,100 (.25 X $77,200)
$308, 28% on the balance, ($154,200 - $153,100 = $1,100 X .28)
Sum the amounts for each bracket to get the $25,398 total taxes due.
That's the calculation unless you have other taxes or credits, lines 57 through 73 on the 1040.
If your itemized deduction are more than $12,700 than your taxable income will be lower and your effective tax rate will be too. Itemized deductions could be higher than standard if you pay a lot in mortgage interest, or property & other taxes, or have a lot of medical expenses, or donate to charities, etc. Look at the Schedule A form to see what is deductible.
If you have more or fewer exemptions or are not married filing jointly then the numbers are different.
2018 will be different than 2017 due to the tax law changes.
Contributions to IRAs, 401K, etc. are factored in before the AGI is determined. See lines 23 - 37 on the 1040.
I am not a tax expert, I just looked at the 1040 and Schedule A forms and googled the tax brackets. This is just federal, I don't know anything about LA state taxes.
I still don't understand the question. Maybe I would if I had seen the part you edited out, but it doesn't matter.
Posted on 3/7/18 at 9:51 am to nctiger71
Tax law is a nasty thing
Posted on 3/7/18 at 7:21 pm to nctiger71
quote:
nctiger71
Posted on 3/7/18 at 7:21 pm to Upperdecker
quote:
Tax law is a nasty thing
frick taxes
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