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View Diary: Do YOU understand how tax brackets work??? (124 comments)

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  •  Anyone with $350k in income & $100k in deductions (0+ / 0-)

    is going to get hit by the alternative minimum tax, so it's essentially impossible to avoid paying taxes on that much income.

    Also, capital gains are taxable income, they're just taxed at a lower rate than wages.

    •  it depends (1+ / 0-)
      Recommended by:
      not a cent

      if your home mortgage is $1,000,000 at 6 percent interest and you have a second mortgage of $100,000 at 9 percent (these amounts were chosen on purpose as the upper limit of deductibility and the interest rates are what was common in 2007 before the meltdown) then you would have $69,000 of mortgage interest deductions alone (based on simple interest calculations -- of course fully amortized would vary a bit). You might also have your own business and have the additional $31,000 or even more in deductible business expenses, such as car lease, gasoline, office space, telephone, utilities, etc.   And yes, I did not mean to imply the capital gains wouldn't be taxed, just that it would be taxed at the capital gains rate (15% for long term gains) rather than the higher bracket for ordinary income.

      My comment was only to show that the $250,000 is net taxable income, not gross.  There are lots of scenarios depending on how the income was earned, etc.

      The GOP -- Hating Women, Gays and People of Color since 1854

      by Former Chicagoan Now Angeleno on Mon Nov 19, 2012 at 11:26:29 PM PST

      [ Parent ]

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