A few calculations can give you a clearer picture of your real income.
In the United States, the more you make, the more you will be taxed. But figuring out how much you have left after taxes can be a little confusing for some. By following this guide, you will be able to figure out how much your actual income will be after taxes and deductions are figured in to get a better picture of your monthly income.
Instructions
1. Determine if your employer has a cafeteria plan through which your tax-deductible expenses, such as health insurance, are taken out before your tax is calculated. If so, multiply your monthly premiums and retirement by 12 to get your adjusted gross income (AGI). If not, ignore this step. You'll pay more taxes each month but you will get them back on your return.
2. Subtract $5,700 from your AGI. This number is the standard deduction in 2010 for single filers. More than two-thirds of Americans use the standard deduction, so it will give you an idea of where to start. The resulting number is your taxable income.
3. Determine your tax bracket. These values change each year. Refer to the IRS website for actual values (see Resources). The tax brackets are 10, 15, 25, 28, 33 and 35 percent as of 2010. The United States uses a marginal tax bracket. This means that if you fall in the 25 percent bracket, you don't pay 25 percent on your whole income. You pay 10 percent on the income that is in that bracket, 15 percent on the next chunk and so on.
4. Calculate your taxes for the 10 percent bracket. If you are in the 10 percent bracket, multiply your taxable income by 10 percent. If you are above the 10 percent bracket, multiply the 10 percent bracket threshold by 10 percent and write down that number.
5. Calculate your taxes for the 15 percent bracket. If you are in the 15 percent bracket, take your taxable income and subtract the 10 percent threshold. Multiply what is left by 15 percent and add it to your previous number and this is your tax liability. If your bracket is higher, take the 15 percent threshold, subtract the 10 percent threshold, and multiply this by 15 percent. Add that to your previous number and keep going. Do this for each bracket until you get to the bracket your taxable income puts you in.
Tags: percent bracket, bracket percent, taxable income, your taxable, your taxable income
