- quote -

Using TurboTax, I just add a fictional $1,000 of income and see how much
the tax increases. I do it once for ordinary income and once for LTCG.
Presumably, the software takes into account the complexities of limitations
and phase-outs and the like.

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In article <akkhg4t8ul6pcedocqj96i00m3u1dea70r[at]4ax.com> ,
DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -


Being picky here, but "taxable income" has had deductions subtracted
already.


- quote -



ArtKamlet at a o l dot c o m Columbus OH K2PZH

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In misc.taxes.moderated, alan wrote:

- quote -


My answer is less correct than the others, but it may be of some use
in planning. Take the amount of taxable income that is not qualified
dividends or capital gains. Subtract deductions. See the table on
http://www.bargaineering.com/article...s-figures.html
for the federal marginal rate.

All of those reasons why this method is not really accurate still
apply.

This does not apply to the marginal rate on qualified LT capital
gains, which is usually 15% for those who would be asking the
question. :-)

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- quote -

No.

- quote -

Correct. What does matter to many people is the rate you get when you
put the result of Form 1040 Lines 66a plus 67 through 71, minus Line 63,
in the numerator, and whatever you want to call your "total income" in
the denominator.

- quote -

In fact, the tax tables themselves have a sharp cutoff for every $50
increment, one dollar more or less can change your tax by five or ten
times that amount.

You can also construct examples where your marginal rate is zero, or
less than zero (Earned Income Credit).

-Mark Bole

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

alan wrote:

- quote -

http://www.fairmark.com/refrence/index.htm provides a good start.
As others replied, there are numerous phase-outs and quirks that lead to
the next $1 of income being impacted by more than this published rate.
Whether correct or not, I refer to this phenomenon as a "phantom tax
rate" and it's impact is most striking in the effect on social security
benefits vs other income during retirement.
I provide a graph of this at
http://www.joetaxpayer.com/ss.html
where I showed that IRA distributions can create a phantom marginal rate
of 46.25% for a woman who otherwise should be in the 15% bracket.

Joe
www.blog.joetaxpayer.com

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

- quote -

And some would argue that the very term "marginal tax rate" is meaningless
because it depends on what type of income you're referring to. Your
marginal rate on interest income is probably different than your marginal
rate on (qualified) dividends or capital gains or 1250 recovery. You might
think your marginal rate on tax exempt income is zero, but if you are
receiving social security ...

You can even construct examples where your marginal rate is over 100%, since
some credits have sharp cutoffs instead of phasing out.
--
Don EA in Upstate NY

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Oct 28, 10:42�pm, kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

Alan:

It is a little more complicated than Art suggests if you consider the
effiective marginal tax rate because AGI, Modified AGI, and AMTI can
impact over twenty-five credits, exemptions, deductions, exclusions,
and eligibilities. Fortunately all 25+ phase-outs can't impact the
same taxpayer, at least for now. For example the effective marginal
tax rate for a Social Security recipient in the nominal 25 percent
bracket can be more than 50 percent because of the impact of income on
taxable Social Security benefits, medical, and miscellaneous expense
deductions. These pahse-outs can also increase state income taxes.

And it can get worse. Because IRS ignores the limitations imposed by
section 111(a) of the Internal Revenue Code, refunds / recoveries
related to state income taxes and other itemized deductions that
produced a tax benefit are included the those same phase-out
calculation in the refund year even though the itemized deduction had
no impact on the phase-out calculations but the income used for
deductions did,,. to the disadvantage of the taxpayer. A rough
analogy would be a merchant keeping the sales tax when you return a
purchase except it is worse. In the case of the Social Security
recipient, the effective marginal federal income tax rate on the
income related to a state income tax overpayment/refund can be more
than 76 percent. And then there is the state income tax. Check out
Minnesota.

Cheers,

WDK

========================================= MODERATOR'S COMMENT:
Please trim unnecessary parts of messages you respond to

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <e5c311b6-7d37-40c4-ab9b-d56442efbbef[at]b38g2000prf.googlegroups.com> ,
alan <alan[at]ucsc.edu> wrote:
- quote -


For most situations, you can apply the tax table in the Form 1040
instruction booklet or the form 1040ES instructions, to the taxable
income line of Form 1040, reduced by the long term gains included
on form 1040 line 13 and the qualified dividends shown on Form
1040 line 9b. If you are subject to AMT the answer is more complex.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Is there an easy way to calculate the fed marginal tax rate? Is there
a table on the IRS site or is there a formula?

Thanks, Alan

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >