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Know anyone trying to make less money to avoid jumping to the next tax bracket? There really is no need ad the tax code taxes on incremental income over a tax bracket NOT the full amount.

Probably going everybody this would be the wish today let’s go over to the mince that some people think if you go over just one dollar over your tax bracket you’re going to end up paying a lot more in taxes well that’s completely false but let me show you the detail as an example here’s your 2017 tax bracket for a single filer for reasonable income ranges if you

Earn from zero dollars to nine thousand three hundred twenty-five dollars you’re going to be in the ten percent tax bracket and then from nine thousand three hundred twenty five to thirty seven thousand nine hundred fifty dollars you’re going to be in the fifteen percent tax bracket now this chart might be up for misinterpretation because you might look at this

And go hey if i’m in this range i’m going to be paying fifteen percent in tax but if i make just one dollar more and come into this range i’m going to be paying 25 percent well 25 percent is not for your full salaries the first nine thousand three hundred twenty-five dollars you make it tax at 10 percent and when you make money in this range it’s going to be

Taxed at 15 percent only the amount in this range is taxes 15 percent so your initial nine thousand some dollars is ten percent and then this amount goes to 15 percent if you earn what just $1 more that one dollar will be taxed at 25 percent not your entire salary from 37 thousand nine and you’re 50 so this is an incremental tax bracket it’s not that if you earn

Just $1 more you’re going to fall off the cliff and suddenly become in this tax bracket and have to pay a lot more in taxes let me make this crystal clear with an example let’s say you’re in the fifteen percent tax bracket and you make right under thirty seven thousand nine hundred fifty dollars and then you just go okay you just multiply it simply by 15 percent

And just think oh you’re paying about five thousand six hundred ninety-two dollars and sixty-five cents in taxes the wrong way to think about this is if you make one dollar more then you think all of a sudden you’re in the twenty five percent tax bracket you just multiply whatever you have that you earn let’s say you earn a dollar more $100 more $1,000 more then

You just multiply your total income by 25 percent and then you get nine thousand four hundred eighty seven dollars and seventy five since this is a huge jump from what you think you’re paying for taxes to what you’re going to pay in the twenty five percent tax bracket and so this makes some people think that if you earn just one more dollar you’re going to have

To pay a lot more in taxes in this case three thousand some dollars more in taxes this is also the thing that keeps some people from taking some overtime pay over the holidays because they want to go oh you know it’s december i’m going to make just under this amount just so i don’t have to pay more in taxes and i’ve also heard of some people purposely not taking

Bonuses just so that they can get under this because they think that hey if i take a $1,000 bonus and you’re right at this edge you’re going to have to pay $4,000 more ah you know this is not true because if you take $1,000 more usually pay about the nics tax bracket which is 25 percent which is $250 more not 4000 the correct way to calculate your taxes is the first

Nine thousand three hundred some dollars that you earn is taxed at 10% now after you earn over this okay the amount between nine thousand seven dollars and thirty seven thousand seven dollars is twenty eight thousand okay so let’s say you earn $1 pass this so this amount gets taxed at 15% you still have some amount that taxed at 10% everybody that earns over this

Amount get nine thousand seven dollars taxed at 10% so you pay nine hundred thirty two dollars for this first nine thousand three hundred twenty-five dollar you earn after you earn over this at twenty eight thousand six hundred twenty-five dollars you pay fifteen percent for this amount not this and this so for 15 percent of twenty eight thousand some dollars is

Four thousand two hundred ninety three dollars and seventy five cents and here comes the tricky part if you earn $1 over the thirty seven thousand nine hundred fifty dollars you’re going to pay 25 percent on just that one dollar so it’s going to be only 25 percent so just the fact that you went over the tax brackets despite a penny even does not mean you’re going

To pay 25 percent on the full income if i add up all the tax liabilities from all the tax brackets you’re going to get five thousand two hundred twenty six dollars and fifty cents and your total income would be thirty-seven thousand nine hundred fifty one and you can see that if you earn just one dollar less it’s only going to be twenty five cent less than this

So there’s no such thing as you earn just a little bit more over your tax bracket you’re going to pay a lot more so i hope that host a lot of you don’t forget to give me a like over here comment down below let me know if you know anyone that tried to stay under a tax bracket just to avoid taxes i do have a patreon link over here if you’re interested in supporting

My channel and don’t forget to subscribe over here thanks for watching

Transcribed from video

MYTH Pay Less Taxes By Staying in 15% Tax Bracket | BeatTheBush By BeatTheBush