Not everyone likes to pay income tax, but almost everyone ends up paying at least something IRS. Even if you do get a refund, it is only because you have already taken money from your paycheck to go to your tax bill.
Whether you’re planning a little advance tax or starting to prepare your tax return, it’s helpful to understand what your tax bill looks like. For 100,000 earning households, the tax bill could change dramatically. Below, we’ll go through some general scenarios and how they will be able to apply on the outstanding 2020 tax return in April 2021. Even if your situation does not fit well with one of them, they should give you an understanding. What to expect on your final tax return.
What a single person without children pays in income tax
First, let’s look at a person who makes 100,000 and has no children or other dependents. People from many different stages of life can fall into this category, whether it be a young worker in a high-income business who has not yet started a family, a divorced person who has no children, or an ex-wife who claims children or dependents or 401 (k ) Retired to draw taxable distributions from plan accounts or traditional IRAs.
The biggest variable with income tax is whether you claim a standard deduction or itemize your deduction. Most people take standard deductions, though, so we’ll assume for these calculations that these taxpayers do too. We will also assume that any investments are held in tax-friendly accounts that do not have immediate tax consequences.
In this case, a total deduction of 12 100,000 would be reduced by a standard deduction of, 12,400. It generates taxable income of Rs 87,600. That income tax is 15,103.50. Assuming you are not eligible for any tax credits or other deductions, it is a tax bill that you will have to pay by cash payment of income tax, quarterly estimated payments and final payment along with your tax return.
What a married couple with two young children can pay in income tax
Next, let’s take a look at a married couple with two children who have a combined income of ,000 100,000. For these purposes, it works between the two guardians no matter how the income is shared. We will again assume that the standard deduction applies and that all taxable income comes from a source that will be taxed at the normal income rate.
For this family, the standard deduction is 24 24,800, more than double the standard deduction alone. That brings the total income to ,000 100,000 down to, 75,200 in taxable income. Moreover, tax brackets are more suitable for married couples who file jointly. The calculated tax ends at 10,892.
However, in this case, you will not stop here. It is possible that both children are eligible for a child tax credit, which reduces the tax by another $ 2,000 per child. That brings the final tax down to 6,892.
|
Thing |
Alone, no dependent |
Filing jointly, two children |
|---|---|---|
|
Total income |
1,000,000 |
1,000,000 |
|
Standard deduction |
(, 12,400) |
(, 24,800) |
|
Taxable income |
, 87,600 |
, 75,200 |
|
Tentative tax |
, 15,104 |
, 10,892 |
|
Tax credits |
. 0 |
, 000 4,000 |
|
Net tax arrears |
, 15,104 |
, 6,892 |
Calculations by the author based on IRS rules.
Other factors to consider
These examples were very simple, but your situation could be more complicated. Here are some things to consider when you run your own tax:
- If the standard deduction you have is greater than the itemized deduction you will receive, itemizing will reduce your tax bill more than the standard deduction.
- These examples assume that you do not qualify for any other deductions or credits. However, there are many ways to reduce your taxable income or your outstanding tax arrears. Contributing to a traditional IRA, for example, allows you to reduce your income to the annual contribution limit. Earnings income credits, American Opportunities and Lifetime Learning Education credits and saver credits can lower your tax bill.
- Your family situation also affects your taxes. Many single people with children qualify for a head of household status, bringing less tax than a tax bracket for most single filers. Similarly, if your husband has recently passed away, you will be allowed to continue to claim joint filing status for the period after your spouse’s death.
- Some types of income are eligible for favorable tax rates. Eligible dividend income and long-term capital gains are taxed at a lower rate than normal income. Depending on your income mix, your taxes may vary.
Despite those specifics, you can see that typical futures make $ 100,000 paying the IRS about 5% to 15% of their income in taxes, with single filers having a much bigger impact. If more than you want to pay, then you have to find a smart tax break to cut your bill on Uncle Sam.
