Looking to buy

370Zsteve · 11-24-2009, 07:30 AM

Quote:

Originally Posted by perfectnobody

so after reading this article to try and understand this better... how does this push you up into another tax bracket, i thought it would push you down,

for example (based on article) lets say your total income for the year is $78,000 putting you in the 25% bracket and you get a tax deductible of $3,000 for buying a Z, wouldn't that make your total taxable income $75,000? or is it the other way round with the $3,000 increasing your total taxable income to $81,000 pushing you into the 28% bracket (don't know why it would, maybe someone can clarify)

thanks!

You are confused. The $3000 reduction would keep you in the same tax bracket, maybe even put you in a lower one. If your gross income was $81k, you would be taxed at a $78k rate after the tax credit.

perfectnobody · 11-24-2009, 07:37 AM

Quote:

Originally Posted by 370Zsteve

You are confused. The $3000 reduction would keep you in the same tax bracket, maybe even put you in a lower one. If your gross income was $81k, you would be taxed at a $78k rate after the tax credit.

that's what i thought the first time

Quote:

Originally Posted by 370Zsteve

Don't forget that you may wind up in a lower tax bracket after the deduction.

so you meant this as a good thing then...

Quote:

Originally Posted by 370Zsteve

If you are now above $80k income, get ready for sticker shock, Bubba!

i guess i got confused by this, i didn't get the meaning, thought it was a bad thing

thanks for the clarification!

spinhead · 11-24-2009, 08:02 AM

Tax brackets are applied incrementally anyway, it's not a big deal to hit the next one. It's not like all your income will be taxed at the higher level.

11-24-2009, 08:02 AM	#3 (permalink)
spinhead Base Member Join Date: Nov 2009 Location: N. Bethesda, MD Posts: 162 Drives: 09 370z BS 6MT Rep Power: 3389	Tax brackets are applied incrementally anyway, it's not a big deal to hit the next one. It's not like all your income will be taxed at the higher level.