The Balanced Spreadsheet-Financial News, Budget Advice, Debt help, Financial Tips, and other advice

September 29, 2009

How much do I pay in taxes?

Filed under: Personal Finance, Real Example, Simulation — Tags: , , , , — thebalancedspreadsheet @ 7:59 pm

Have you ever wondered how much you really pay in taxes each year?  I was curious and decided to see what my real income tax rate is.  I took what my wife and I had made so far this year and projected our earnings for the fourth quarter of 2009 and came up with our gross income.  I then did a tax projection and came up with the following:

09-29-09 How much do you pay in taxes

 

 We are in the 15% Federal tax bracket, but due to itemized deductions, 401(K) contributions and the Making work pay tax credit, we will pay about 7.5% of our gross in federal income taxes.  Our Social Security and Medicare taxes are blow their rates of 6.2% and 1.45% respectively due to health insurance premium deductions.  Even though property taxes are not tied to income, I included them anyways because they are a tax.  Unfortunately I do not keep all my receipts (I am not that much of a nerd. :)) though out the year to add sales tax in my calculations. 

The 22.45% tax means we worked until March 23rd to pay all our taxes for the year.  According to research done by the Tax Foundation, we beat Ohio’s average by 19 days (April 11th) and the national average by 21 days (April 13th)!

This post is not mean to be a pro-tax or anti-tax post.  It is just meant to be fun to see how much you really pay in taxes each year.  If you work for an employer most of your taxes are already taken out of your paycheck before it even gets to you and it is easy to forget to check how much you pay each year.

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