Effect of 2003 tax law on investment strategies Fm Vanguard
Posted: Wed Sep 24, 2003 5:16 pm
https://flagship3.vanguard.com/VGApp/hn ... 3_ALL.html
FYI - There are significant benefits if one can keep one's income in the 15% tax bracket. Dividends and LT capital gains are taxed at 5% except in 2008. :DIn 2008, the rate is ZERO. :shock:Time for some
taxable gain harvesting!
Oliver
Approx...........Bracket
7,800 Single 0%
13,000 Single 10%
35,000 Single 15%
15,500 Married 0%
25,000 Married 10%
71,000 Married 15%
Example
Your effective income tax rate is estimated at 10.72%.
This is 10.72% of your total income of $71,000. 10.72% would also be your effective tax rate. Your income puts you in the 15.00% tax bracket. Your total Federal income taxes are estimated at $7,610. This calculator uses the new 2003 tax tables and rules passed with the 'Jobs and Growth Tax Relief Reconciliation Act of 2003'.
Your Income Tax Rates
Effective tax rate 10.72%
Income tax bracket 15.00%
Marginal tax rate 15.00%
Your marginal tax rate is estimated at 15.00%.
Based on your filing status, incomes over $209,250 begin having their personal exemptions phased out. In addition, itemized deductions begin to be phased out at $139,500. The child tax credit of $1,000 per child begins to be phased out at $110,000. This increases your tax bill, and your marginal tax rate. Including these phase outs can increase your tax bill. For example, if you earn an additional $1,000 you will owe income taxes at a 15.00% marginal tax rate.
How should you use your effective and marginal tax rates?
You should use your effective tax rate when estimating your total tax liability for a year. For example, if you are planning your retirement and wish to estimate your tax liability for an entire year, you should use your effective tax rate. Your marginal tax rate is useful when calculating taxes on additional income, such as the taxes on a windfall or a year end bonus. You can also use your actual tax bracket for these calculations, although it does not take the phase out of any tax deductions into account.
Tax Calculation Summary
Tax Calculation Summary
Wages, salaries, tips, etc $71,000
Filing status Married filing jointly
Personal exemption yes
Spouse exemption yes
Dependents qualifying for child tax credit 0
Itemized deductions $0
Itemized deductions after phase out
( for Married filing jointly Filers with incomes over $139,500.) $0
Standard deduction $9,500
Deduction to use
(higher of adjusted itemized deductions and standard deduction) $9,500
Deduction for exemptions
(including phase out for Married filing jointly Filers with incomes over $209,250.) $6,100
Taxable income $55,400
Child tax credit
(including phase out for Married filing jointly Filers with incomes over $110,000.) $0
Total tax $7,610
FYI - There are significant benefits if one can keep one's income in the 15% tax bracket. Dividends and LT capital gains are taxed at 5% except in 2008. :DIn 2008, the rate is ZERO. :shock:Time for some
taxable gain harvesting!
Oliver
Approx...........Bracket
7,800 Single 0%
13,000 Single 10%
35,000 Single 15%
15,500 Married 0%
25,000 Married 10%
71,000 Married 15%
Example
Your effective income tax rate is estimated at 10.72%.
This is 10.72% of your total income of $71,000. 10.72% would also be your effective tax rate. Your income puts you in the 15.00% tax bracket. Your total Federal income taxes are estimated at $7,610. This calculator uses the new 2003 tax tables and rules passed with the 'Jobs and Growth Tax Relief Reconciliation Act of 2003'.
Your Income Tax Rates
Effective tax rate 10.72%
Income tax bracket 15.00%
Marginal tax rate 15.00%
Your marginal tax rate is estimated at 15.00%.
Based on your filing status, incomes over $209,250 begin having their personal exemptions phased out. In addition, itemized deductions begin to be phased out at $139,500. The child tax credit of $1,000 per child begins to be phased out at $110,000. This increases your tax bill, and your marginal tax rate. Including these phase outs can increase your tax bill. For example, if you earn an additional $1,000 you will owe income taxes at a 15.00% marginal tax rate.
How should you use your effective and marginal tax rates?
You should use your effective tax rate when estimating your total tax liability for a year. For example, if you are planning your retirement and wish to estimate your tax liability for an entire year, you should use your effective tax rate. Your marginal tax rate is useful when calculating taxes on additional income, such as the taxes on a windfall or a year end bonus. You can also use your actual tax bracket for these calculations, although it does not take the phase out of any tax deductions into account.
Tax Calculation Summary
Tax Calculation Summary
Wages, salaries, tips, etc $71,000
Filing status Married filing jointly
Personal exemption yes
Spouse exemption yes
Dependents qualifying for child tax credit 0
Itemized deductions $0
Itemized deductions after phase out
( for Married filing jointly Filers with incomes over $139,500.) $0
Standard deduction $9,500
Deduction to use
(higher of adjusted itemized deductions and standard deduction) $9,500
Deduction for exemptions
(including phase out for Married filing jointly Filers with incomes over $209,250.) $6,100
Taxable income $55,400
Child tax credit
(including phase out for Married filing jointly Filers with incomes over $110,000.) $0
Total tax $7,610