Calculating your real tax rate

Assignment: Your assignment for today is to calculate your income tax. Calculating your taxes can be a bit confusing to say the least. Today, you're going to figure your real taxes. Use the following web site to calculate your tax bracket.

http://www.moneychimp.com/features/tax_brackets.htm


For the sake of income, lets figure your income on your birth date. Calculate it like this. If your birth date is July 4, 1997 then use this as your income

06/04/97
060497
$60,497

or if its October 10, 1996 then it would be:
10/10/96
101096
$101,096

Got it? Good.

Now, to calculate your income tax, us the 2013 table filing as single. Remember that the first $17,850 is taxed at 10%, from $17,850 to $72,500 is taxed at 15%, and $72,500 to $146,400 is taxed at 25%.

So if your income is $101,096, your tax would be calculated as follows

$17,850 x 10% = 1,785
(72,500 - 17,850) x 15% = $8,197.50
(101,096-72,500) x 25% = $7,149

1785.00 + 8197.50 + 7149.00 =  $17,131


Now  to calculate your FICA taxes at 6.2% for Social Security and 1.45% for Medicare. To use our example above...

101,096 x .062 = $6267.95
101,096 x .0145 = $1465.89
Total = $7,733.84
+ 17,131
= $24,864.84 or 24.59%

Try it! Calculate your tax rate and turn in your paper showing your work.

This exercise is worth 10 points

***For an extra 5 points, calculate your tax amount and percentage if you deduct a $5000 contribution to your IRA and deduct 5% of your paycheck for your 401K retirement account.