How to determine tax bracket, AGI or gross salary?
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Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date
How to determine tax bracket, AGI or gross salary? Sam 01-13-2007
Posted by Sam on January 13, 2007, 3:00 pm
Is a persons tax bracket determined by their AGI or just gross salary?
I just received a pay increase that puts my gross salary just a few
hundred dollars below the cut off for the 28% tax bracket and next year
(2008) I fully expect that my gross salary will be in the 28% tax
bracket but I think taxes are based on AGI so I should still be in the
25% bracket.

Can someone please confirm that a persons tax bracket is based on AGI
or gross salary?

Thanks


Posted by Rich Carreiro on January 13, 2007, 3:54 pm

> Is a persons tax bracket determined by their AGI or just gross salary?

Neither. It's determined by their taxable income (AGI less itemized or
standard deduction less personal exemptions).

> I just received a pay increase that puts my gross salary just a few
> hundred dollars below the cut off for the 28% tax bracket and next year
> (2008) I fully expect that my gross salary will be in the 28% tax
> bracket but I think taxes are based on AGI so I should still be in the
> 25% bracket.

You do realize that only the amount of taxable income extending into
the 28% bracket is taxed at 28%, not all of it?

--
Rich Carreiro rlcarr@animato.arlington.ma.us


Posted by Bucky on January 14, 2007, 3:01 am
Rich Carreiro wrote:
> Neither. It's determined by their taxable income (AGI less itemized or
> standard deduction less personal exemptions).

exactly.

> You do realize that only the amount of taxable income extending into
> the 28% bracket is taxed at 28%, not all of it?

yup, this is a point that many people misunderstand. If you are $1 over
the 28% bracket, then only that $1 is taxed at 28%.


Posted by RML on January 14, 2007, 6:57 am
Is pension considered income, in determining if SS is taxed? What
about withdrawals from an IRA, are they "income"?

Thanks

On Sat, 13 Jan 2007 14:54:53 -0600, joetaxpayer

At retirement,
social security can be taxed baed on other income, so phantom rates of
50% may appear.


Posted by Dave Dodson on January 14, 2007, 7:52 am

RML wrote:
> Is pension considered income, in determining if SS is taxed? What
> about withdrawals from an IRA, are they "income"?

Yes and yes.

Dave


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