03-15-2004, 08:39 AM
|
#1 |
|
Commander
  
Join Date: Jun 2000
Location: The Toilet Capital of America
Posts: 1,305
 |
Reducing taxes
I was looking at the IRS tax schedule for 2003 and I realized that if I lowered my taxable income to below $68,800 I would save over $10k in taxes.
http://www.irs.gov/formspubs/article...109877,00.html Currently I'm in the bracket of $68800 and above. I'm putting in max on my 401k which is $13,000 for this year and I'm thinking if I buy a place and get a mortgage, I could lower my taxable income to the lower bracket. Do you guys know if the interest for a mortgage is 100% deductible. Just say if I were to pay $580 in interest a month due to the mortgage, I would be paying $6960 a year. That amount plus the $13k I'm conrtibuting to my 401k will definitely lower my income to below $68,800. Is my logic making sense? Am I missing something? What is this thing called the AMT?
__________________
"I'm very sorry for your loss. Your mother was a terribly attractive woman." -Royal Tenebaum "Oh yeah. Oh yeah. I would do everything to her, I don't care what she looks like. I would wreck that chick." -Brian from the Family Guy after Peter asked him whether he would have sex with Lois. |
|
|
|
03-15-2004, 08:47 AM
|
#2 |
|
Rear Admiral Lower Half
 
Join Date: Jul 2001
Location: Colorado
Posts: 2,574
|
I'm not entirely sure you're reading that right. If you make, say, $67,000, your tax would be
3910 + (67000 - 28400) * .25 If you made, say $80,000, your tax would be 14,010 + (80,000 - 68,800) * .28 If I read this correctly. I'm not sure where you're saving $10,000. (As usual, I could be wrong. |
|
|
|
|
03-15-2004, 08:53 AM
|
#3 |
|
Commander
Join Date: Jun 2000
Location: The Toilet Capital of America
Posts: 1,305
|
You're right I wont be saving $10k. I didn't take the 25% of the difference into account.
|
|
|
|
|
03-15-2004, 10:32 AM
|
#4 |
|
Chief of Naval Operations
 
Join Date: Jun 2000
Location: the ghetto's of bawlmo'
Posts: 10,951
   |
so, in essence... you'd be saving 3% of your income.
at 68800 * .28 = 19,264. if you made: 67799 * .25 = 16,949.75 for a savings of 2,314.25 innerestin.
__________________
 |
|
|
|
|
03-15-2004, 11:44 AM
|
#5 |
|
Commander
Join Date: Jun 2000
Location: The Toilet Capital of America
Posts: 1,305
|
Yeah, that's still decent. But is the interest 100% deductible or is it just a percentage of it?
Last edited by JackHammer : 03-15-2004 at 11:47 AM. |
|
|
|
|
03-15-2004, 01:28 PM
|
#6 |
|
Chief of Naval Operations
Join Date: Jun 2000
Location: woah... why is welfareloser here with me so early in the morning and more importantly why am I wearing her clothes?!?
Posts: 13,436
|
yes
__________________
********************************** DCM #1 (Founder)  "Nobody beats Vitus Gerulaitis 18 times in a row." - Vitus Gerulaitis on beating Jimmy Connors after 17 failed attempts. |
|
|
|
|
03-15-2004, 02:43 PM
|
#7 |
|
Commander
Join Date: Jun 2000
Location: The Toilet Capital of America
Posts: 1,305
|
Yes it is 100% deductible?
|
|
|
|
|
03-15-2004, 03:22 PM
|
#8 |
|
Old Skooler Numba 1
Join Date: Nov 2000
Location: Diego
Posts: 9,903
|
no
__________________
~~ |
|
|
|
|
03-30-2004, 03:30 PM
|
#9 | |
|
Admiral
Join Date: Nov 2001
Location: East coast
Posts: 5,922
|
Quote:
That isn't correct either. Here is how it would work: If you made 67,000 you would owe: $3,910 + .25 * (67000 - 28400) = $13,560 If you made 70,000 you would owe: 14,010 + .28 * (70000 - 68800) = $14,346 If you move up into a higher tax bracket you don't tax ALL of you income at that tax rate only the amount of money that fits into that bracket. For example if you made $350,000 this is what would happen: 7,000 * 0.10 + (28,400 - 7,000) * 0.15 + (68,800 - 28,400) * 0.25 + (143,500 - 68,800) * 0.28 + (311,950 - 143,500) * 0.33 + (350,000 - 311,950) * 0.35 = TOTAL TAX DUE of $103,832 (This is correct) If you did it the way you guys are talking about it would be: 350,000 * 0.35 = $122,500 (This is incorrect) Hope this helps clear up any confusion. |
|
|
|
|
Linear Mode
