The Tax Cuts and Jobs Act (TCJA) has put taxes on the forefront of everyone’s mind, especially with more changes being implemented in 2019. But while we talk circles around alimony and the standard deduction changes, we find that many people don’t have a fundamental understanding of tax brackets. To help paint the picture, let’s start with the tax brackets for this upcoming year. DO YOU KNOW HOW TO CALCULATE YOUR INCOME TAX? HOW TAX BRACKETS WORK
BRACKET
RATE
$0.00 – $9,525.00
10% 12% 22% 24% 32% 35% 37%
$9,525.00 – $38,700.00 $38,700.00 – $82,500.00 $82,500.00 – $157,000.00 $157,500.00 – $200,000.00 $200,000.00 – $500,000.00
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$500,000.00 +
CALCULATING INCOME TAX A common misconception most Americans make when it comes to calculating income tax is to just take your salary and multiply it by the percentage in your bracket. For example, if you make $25,000 a year, your tax rate would be 12 percent, and your income tax would be $3,000. (25,000 x .12 = $3000) In reality, income tax is calculated bracket by bracket, which ends up costing you, the taxpayer, significantly less. If you make $25,000 a year, then you would calculate the full amount of tax from the first bracket, and then add that to the remainder from the second.
SPICY, CREAMY SWEET POTATOES
INGREDIENTS
For example:
• 5 pounds sweet potatoes • 1 cup canned coconut milk • 1 tablespoon Thai red curry paste • 1/2 cup dark brown sugar
• 4 tablespoons unsalted butter • 1 tablespoon kosher salt
BRACKET $9,525.00 $15,475.00
RATE TAX
10% 12%
$952.50
$1857
Total
$2,809.50
DIRECTIONS
Some of you might be thinking the second bracket doesn’t make sense. The number isn’t a full $25,000 because you’ve already paid the first bracket’s taxes. From there, you only need to pay the remainder of the first bracket subtracted from your salary. If you’re worried about the calculations, don’t be. That’s what we are here for. The higher the tax bracket, the more complicated finances can become, which is why a good financial planner is crucial to the long-term growth of your finances. Understanding IRA distributions, Roth conversions, and other retirement fundamentals can help maximize your portfolio. If you’re interested in how you can mitigate losses with proper tax planning, contact us today.
1. Heat oven to 375 F. On a large sheet pan, bake potatoes until very soft, approximately 75 minutes. 2. Let potatoes cool until they are safe to handle, then peel and mash. 3. In a small saucepan over low heat, combine coconut milk and curry paste. Once mixed, add the mixture, salt, half the sugar, and half the butter to potatoes. 4. 30 minutes before serving, heat oven to 425 F. Spread potatoes in a baking dish, cover with foil, and bake for 20 minutes. 5. Uncover potatoes and dot with remaining butter and sugar. Broil until brown, crusty, and delicious. Serve hot.
Inspired by The New York Times
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