On Mon, 21 Apr 2008 12:25:07 -0500, Tad Borek <borekfm@[EMAIL PROTECTED]
>
wrote:
>Heather wrote:
>> I have no doubt this is a completely ignorant question, so I will
>> apologize in advance. Where can I find the bracket amounts? How/
>> where can I see the brackets to determine what amount of income moves
>> me into the next higher bracket? Once I know the brackets, how do I
>> apply the logic? Do the brackets apply to Line 43 of the return
>> "Taxable Income"?
>
>No need to apologize for asking an ignorant tax question, the answer
>isn't at all obvious. I just did one of these projections for a client
>and every rate we came up with for "taxes on the next dollar earned" was
>a strange hybrid rate that didn't match any of the tables. Especially
>when adding in Social Security/self-employment taxes.
>
Tad is exactly right that outcomes are not necessarily obvious. What
tax bracket I am in (or will be in) is not the same answer as what is
my marginal tax rate (on the next dollar) which is not the same answer
as how will my computed taxes be affected by any particular change to
my income. The only answer to the latter question, which is the only
real question in practice, is to calculate the new return exactly
considering all the effects on all the factors that go into a tax
calculation.
If one is attempting to forecast tax scenarios for future years this
requires the use of a tax model with future year rates, bracket
points, phase outs, and AMT rules written in.
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