What is your effective tax rate?

O

ocorbust_IHB

New member
Just curious to see what people's effective tax rates are? I finally wrapped up filing my taxes this year, and I definitely think I'm not aggressive enough at minimizing my taxes. Unfortunately I'm a renter :) so no mortgage interest deduction, but I feel like I'm being too "by-the-book" and need to get professional tax planning advice.....



AGI: 250-300k

effective tax rate: 21%



Yours?
 
[quote author="ocorbust" date=1239802082]Just curious to see what people's effective tax rates are? I finally wrapped up filing my taxes this year, and I definitely think I'm not aggressive enough at minimizing my taxes. Unfortunately I'm a renter :) so no mortgage interest deduction, but I feel like I'm being too "by-the-book" and need to get professional tax planning advice.....



AGI: 250-300k

effective tax rate: 21%



Yours?</blockquote>


Ours is 15.89% with AGI a smidge below $200K. Almost finalized our returns yesterday without loading up the ole charitable contributions section. Saved a few hundred in taxes by pimping out the Goodwill donations.
 
AIG: $100kish

Effective tax rate: 11.72% (due in part to being able to file head of household, having active real estate tax losses, and the final year of writing off interest & prop tax on my sold condo)
 
9.7%. of our AGI. Real estata rental loss and retirement contributions bring AGI down quite a bit. Itemizing for the first time made a big difference too. Our federal income tax is actually only 6.25% of our gross income. My SE employment tax is more than our combined federal income tax. Before the two houses I used to feel like we paid through the nose, but this year I feel just the opposite.
 
effective tax rate for fed was 20.6% and 9.3% for CA - a whopping 30 f -ing %!!! Im looking forward to the tax increases in 2011!
 
Mortgage interest deduction seems to reduce taxes quite a bit... before we entered last year's interest payments were were owing 10s of thousands in taxes... once we finished, the gov(s) owed us.



Man... we're gonna eat it next year because we won't have a huge mortgage write-off.
 
[quote author="irvine_home_owner" date=1239858942]Mortgage interest deduction seems to reduce taxes quite a bit... before we entered last year's interest payments were were owing 10s of thousands in taxes... once we finished, the gov(s) owed us.



Man... we're gonna eat it next year because we won't have a huge mortgage write-off.</blockquote>


but think about how much cash you still have in your pocket instead of losing it on the house!
 
[quote author="qwerty" date=1239856655]effective tax rate for fed was 20.6% and 9.3% for CA - a whopping 30 f -ing %!!! Im looking forward to the tax increases in 2011!</blockquote>


I thought effective tax rate meant the rate you pay on all of your income, not the marginal. I thought CA's highest marginal was 9.3%, so am confused how you can be paying an effective tax rate that is the same as the marginal.
 
[quote author="freedomCM" date=1239859221][quote author="irvine_home_owner" date=1239858942]Mortgage interest deduction seems to reduce taxes quite a bit... before we entered last year's interest payments were were owing 10s of thousands in taxes... once we finished, the gov(s) owed us.



Man... we're gonna eat it next year because we won't have a huge mortgage write-off.</blockquote>


but think about how much cash you still have in your pocket instead of losing it on the house!</blockquote>
Exactly...when I get to save over $2,000 per month I don't mind paying a few extra thousand in taxes.
 
[quote author="stepping_up" date=1239871546][quote author="qwerty" date=1239856655]effective tax rate for fed was 20.6% and 9.3% for CA - a whopping 30 f -ing %!!! Im looking forward to the tax increases in 2011!</blockquote>


I thought effective tax rate meant the rate you pay on all of your income, not the marginal. I thought CA's highest marginal was 9.3%, so am confused how you can be paying an effective tax rate that is the same as the marginal.</blockquote>


You are right. Good catch - didn't notice that. I just checked my tax return. Turbotax does indeed say my CA effective rate is 9.3 but when I recalculated it, it was 7.4%, not sure why turbotax says 9.3. So recalculated my Fed tax rate and that one was accurate.
 
[quote author="ocorbust" date=1239802082]Just curious to see what people's effective tax rates are? I finally wrapped up filing my taxes this year, and I definitely think I'm not aggressive enough at minimizing my taxes. Unfortunately I'm a renter :) so no mortgage interest deduction, but I feel like I'm being too "by-the-book" and need to get professional tax planning advice.....



AGI: 250-300k

effective tax rate: 21%



Yours?</blockquote>


Is that State and Federal combined? If it is, how did you get your effective tax rate so low? My 2007 income was around 250k, and yet, Federal is 23.4% while State is 7.3% for a combined 31%... I have mortgage (360k) interest to write off and maxed 2 IRAs. Are you sure you did it right?



If most of your income is on W2, don't forget about the 7.5% on SS and Medicare that you shell out, in addition to the regular income taxes. For what we are paying and the kind of benefits we get, we are definitely being screwed...
 
yeah, but what I learned this tax year is that your income from SE under $1,000,000 is not subject to AMT. I thought for sure we would be hit with it, but turns out that in addition to owning RE, the government really likes the self employed.
 
[quote author="MacInThebox" date=1239882392] I have mortgage (360k) interest to write off and maxed 2 IRAs.



</blockquote>


How does maxing out two IRAs help your tax situation? What kinds of IRAs were these?
 
[quote author="stepping_up" date=1239884453]yeah, but what I learned this tax year is that your income from SE under $1,000,000 is not subject to AMT. I thought for sure we would be hit with it, but turns out that in addition to owning RE, the government really likes the self employed.</blockquote>
Yes they do and allow for so many write-offs. :)
 
[quote author="MacInThebox" date=1239882392]



For what we are paying and the kind of benefits we get, we are definitely being screwed...</blockquote>




What is living in a country not subject to attack by other countries worth? A state that takes care of the most destitute? With a good public health system so that you don't get TB or poisoned in restaraunts? A city with good schools, police, and fire protection? And health care and a small pension when you are old?





I may not really like paying a chunk in taxes, but I'm not going to say that it isn't worth it.
 
[quote author="usctrojanman29" date=1239887858][quote author="stepping_up" date=1239884453]yeah, but what I learned this tax year is that your income from SE under $1,000,000 is not subject to AMT. I thought for sure we would be hit with it, but turns out that in addition to owning RE, the government really likes the self employed.</blockquote>
Yes they do and allow for so many write-offs. :)</blockquote>


And you can set up an individual 401K where you can put up to 25% of your business income.
 
[quote author="freedomCM" date=1239889145][quote author="MacInThebox" date=1239882392]



For what we are paying and the kind of benefits we get, we are definitely being screwed...</blockquote>




What is living in a country not subject to attack by other countries worth? A state that takes care of the most destitute? With a good public health system so that you don't get TB or poisoned in restaraunts? A city with good schools, police, and fire protection? And health care and a small pension when you are old?





I may not really like paying a chunk in taxes, but I'm not going to say that it isn't worth it.</blockquote>


Maybe macinthebox was comparing himself relative to others who dont pay as much in income taxes. I would agree, I pay much more in taxes than the average person, but i dont get any more benefit than the average person. We all benefit equally from the police, fire dept, etc and im supposed to feel good about paying more for those services than the average person? You make it sound like paying an insane amount of taxes is a patriotic thing to do.
 
[quote author="qwerty" date=1239929091][quote author="freedomCM" date=1239889145][quote author="MacInThebox" date=1239882392]



For what we are paying and the kind of benefits we get, we are definitely being screwed...</blockquote>




What is living in a country not subject to attack by other countries worth? A state that takes care of the most destitute? With a good public health system so that you don't get TB or poisoned in restaraunts? A city with good schools, police, and fire protection? And health care and a small pension when you are old?





I may not really like paying a chunk in taxes, but I'm not going to say that it isn't worth it.</blockquote>


Maybe macinthebox was comparing himself relative to others who dont pay as much in income taxes. I would agree, I pay much more in taxes than the average person, but i dont get any more benefit than the average person. We all benefit equally from the police, fire dept, etc and im supposed to feel good about paying more for those services than the average person? You make it sound like paying an insane amount of taxes is a patriotic thing to do.</blockquote>


I actually don't mind paying more if I make more, but there is a limit. If I am paying 100k in taxes a year, I expect to get better healthcare, I expect social security will be there with no cut in benefit when I retire, and I expect my tax money not going to people who acted irresponsibly. My income on paper looks good, and I am a frugal person, but I am having an uneasy time saving money. If I get seriously ill, probably all that I worked hard for will be consumed by medical bills, the number one cause of bankruptcy in the US. I got an eye infection a while back. Went to the doctor and got a prescription. The eye drop that's less than 0.5 fl oz cost me $70 "with" insurance. If that doesn't depress you and make you feel you are getting the shorter end of the stick, I have nothing to say.
 
[quote author="ipoplaya" date=1239887837][quote author="MacInThebox" date=1239882392] I have mortgage (360k) interest to write off and maxed 2 IRAs.



</blockquote>


How does maxing out two IRAs help your tax situation? What kinds of IRAs were these?</blockquote>


Well, the money you put in IRA (regular) are not taxed now... I don't qualify for Roth IRA.
 
[quote author="qwerty" date=1239882010][quote author="stepping_up" date=1239871546][quote author="qwerty" date=1239856655]effective tax rate for fed was 20.6% and 9.3% for CA - a whopping 30 f -ing %!!! Im looking forward to the tax increases in 2011!</blockquote>


I thought effective tax rate meant the rate you pay on all of your income, not the marginal. I thought CA's highest marginal was 9.3%, so am confused how you can be paying an effective tax rate that is the same as the marginal.</blockquote>


You are right. Good catch - didn't notice that. I just checked my tax return. Turbotax does indeed say my CA effective rate is 9.3 but when I recalculated it, it was 7.4%, not sure why turbotax says 9.3. So recalculated my Fed tax rate and that one was accurate.</blockquote>


Turbotax also says 9.3 for me.
 
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