How Much Income Tax Really Are The Feds ... - Finance information

If you?re trying to save money, you ought to know how much the federal government earn from what is taking you. Most people just do not know. Finding out will show you why it?s hard to get ahead. This article shows how the fed gets 35.4% of working income of $ 80,000.

We hear a lot about income taxes, but most people do not know just how much they?re paying income-related taxes. We?re taxed by both our federal government and our state. Since the federal government takes the lion?s share, I?ll concentrate on its taxation

Two simultaneous taxes on your income.

The federal government imposes two different taxes on what you earn by working. They are the:

* Income Tax, and
* Payroll tax.

What everyone knows as your ?income? tax has a set of tax brackets, each with its own tax rate from 10% to 35% (2009). These rates are applied to your taxable income in excess of income Which is your ?tax free? income

Your tax free income is any income you earn that?s below the ?tax-threshold? for your filing status. ? single, married, and head of household. This tax threshold is the sum of your personal exemption and the standard deduction. For a single person the tax threshold is $ 9.350 ($ 10.750 if age 65 and over); for married it?s about twice this

The more taxable income you have the more it moves into higher tax rate brackets -. increasing the average overall tax you pay for ?income? tax.

The ?payroll? tax is a second tax system Simultaneously applied to your working income. This tax pays your Social Security benefits (income) at retirement age and most of your Medicare benefits when you reach 65 ? presumably

The ?payroll? tax at a fixed percentage of Applies your working income -. No brackets . As an employee, you pay 6.2% of your working income for Social Security (only up to $ 106.800 income) and 1.45% of it for Medicare (no limit). Together they take an additional 7.65% of your income. There?s no tax threshold (or tax free) level of income for this system

But your employer then has to pay 7.65% of what income he pays you for your Social Security and Medicare. Most employees are unaware of this extra tax money your employer is paying for you. Well, between you and your employer, the federal government takes 15.3% (= 2 times 7.65%) of your income. If you?re self-employed you pay the whole 15.3%.

To from your working income, the federal government takes your taxes ?income tax? you pay according to your taxable income applied to the tax brackets and thus gets 15.3% of your working income too.

How much does the fed get from a single person making $ 80,000

age

Let?s take a person under 65 who makes $ 80,000 for a salary and apply the two federal income tax on his salary system to see how much tax he generated rates for the fed

For the ?income? tax system, we subtract off his income tax free -. he The tax threshold of $ 9.350 from his $ 80,000 ? to get his ?taxable income? of $ 79.650 ($ 9.350 = $ 80,000 less). This is applied against the tax brackets as:

The first $ 8.350 is taxed at 10% tax rate to give $ 835
The next $ 25.600 is taxed at the 15% tax rate to give $ 3.840, and
The next $ 48.300 (he has only $ 45.700 but not left) is taxed at the 25% tax rate to give $ 11.425
That results in a total ?income? tax of $ 16.100 Which is 20.1% of his $ 80,000 salary.

For his ?payroll? tax on employee as he pays 7.65% of his $ 80,000 Which is $ 6.120 . His employer, though, must pay the same 7.65% ? another $ 6.120. Sun between the employee and his employer, the fed gets 15.3% of his $ 80,000 Which comes to $ 12.240. Note that employee to employer costs of his income more plus 7.65%. If the employee was self-employed with net income of $ 80,000, he?d have to pay the full 15.3% for ?payroll? tax .

So the

total tax paid to the federal government based on his working income comes to $ 28.340 made up of:

* ?income? tax of $ 16.100
* ?Payroll? tax of $ 12.240 ($ 6.120 from $ 6.120 from employee and employer)

The employee pays $ 22.220 of this Which is 27.8% of his salary. His employer pays the rest.
If he were self-employed with net business income of $ 80,000, he?d pay all taxes $ 28.340
Yes, is $ 28.340 to $ 80.000 35.4% of working income. That?s what the fed gets.

Someone making $ 80,000 per year is really not making a lot of money. The fed?s ?take? is too much now. Income taxes originally started at 1% for the very rich. And now the government is planning to tax you more.

Source: http://www.lovefinanceinfo.com/2012/03/how-much-income-tax-really-are-the-feds-from-taking-you/?utm_source=rss&utm_medium=rss&utm_campaign=how-much-income-tax-really-are-the-feds-from-taking-you

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