$0 | $7,825 | 10% of the amount over $0 |
$7,825 | $31,850 | $782.50 plus 15% of the amount over 7,825 |
$31,850 | $77,100 | $4,386.25 plus 25% of the amount over 31,850 |
$77,100 | $160,850 | $15,698.75 plus 28% of the amount over 77,100 |
$160,850 | $349,700 | $39,148.75 plus 33% of the amount over 160,850 |
$349,700 | no limit | $101,469.25 plus 35% of the amount over 349,700 |
See IRS.gov for more information on your specific information.
My effective tax rate winds up being about 13.5%--and then there's New York State and City taxes to figure in. When I was at Starbucks, several employees realized that there was a per-week hourly limit after which it was pointless to work since we lost the extra income to taxes.
I also wondered the other day whether there is a problem with owing taxes each year as opposed to getting a refund. I aim to break even, but with my up and down side income, have had to pay for the last two years and expect to for 2007. I set money aside throughout the year in anticipation, although I do not file quarterly. As far as I can tell, as long as I pay by April 15, there's no problem at all.
I have some posts planned for the future regarding taxes as an interest-free loan (either way) and how to take advantage of what your tax dollars are buying you.
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