income taxes

[jeteaa]

For 2010 we filled married jointly (with one income and rental house income), It came to 100K gross. After deductions we had a taxable income of 68K, which from my understanding in right under the max amount for the 15% federal tax bracket. My question is for those of you who really understand federal income tax, if I were to get a job, would all my income be taxed at the higher rate of 25%.

[Sharon, RN]

As usual, check with an accountant- but my understanding is that you would only pay 25% on the amount OVER the income level that is taxed at 15%.  For example (I'm making up these numbers):

Let's say you make $100,000.  The 15% tax bracket is up to $80,000.

So, you would pay 15% of $80,000 ($12,000).

Then, you would pay 25% on the amount left over, $100,000 - $80,000 = $20,000.  So, you would pay 25% of $20,000 ($5,000).  So, the total taxes paid would be $17,000 (which comes to an effective tax of 17%).

Anyway, if I'm wrong, I hope someone corrects me!  

Good luck!

[Carson]

Yes, that's pretty much how it works.  Here are the 2011 tax rate schedules:

• 10% on taxable income from $0 to $17,000, plus
• 15% on taxable income over $17,000 to $69,000, plus
• 25% on taxable income over $69,000 to $139,350, plus
• 28% on taxable income over $139,350 to $212,300, plus

•  
• About.com's article on it is pretty informative.

Edited by Carson - 4/21/11 at 4:54pm