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Here is some TAX tips before you file your 2011 TAX
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If you're trying to save money, you ought to know how much the federal government is taking from
what you earn. Most people just don't know. Finding out will show you why it's hard to get ahead.
This article shows how the fed gets 35.4% of an $80,000 working income.
We hear a lot about income taxes, but most people don't know just how much income-related
taxes they're paying. We're taxed by both our federal government and our state. Since the federal
government takes the lion's share, I'll concentrate on its taxation.
Two simultaneous taxes on your income:
The federal government imposes two different taxes on what you earn by working. They are the:
* income tax, and
* payroll tax.
What everyone knows as your 'income' tax has a set of tax brackets each with its own tax rate
from 10% to 35% (2009). These rates are applied to your taxable income which is income in
excess of your 'tax free' income.
Your tax free income is any income you earn that's below the 'tax-threshold' for your filing status -
single, married, and head of household. This tax threshold is the sum of your personal exemption
and the standard deduction. For a single person the tax threshold is $9,350 ($10,750 if age 65 and
over); for married it's about twice this.
The more taxable income you have the more it moves into higher tax rate brackets - increasing the
average overall tax you pay for 'income' tax.
The 'payroll' tax is a second tax system simultaneously applied to your working income. This tax
pays your Social Security benefits (income) at retirement age and most of your Medicare benefits
when you reach 65 - presumably.
The 'payroll' tax applies at a fixed percentage of your working income - no brackets. As an
employee, you pay 6.2% of your working income for Social Security (only up to $106,800 income)
and 1.45% of it for Medicare (no limit). Together they take an additional 7.65% of your income.
There's no tax threshold (or tax free) level of income for this system.
But your employer also has to pay 7.65% of what income he pays you for your Social Security and
Medicare. Most employees are unaware of this extra tax money your employer is paying for you.
So, between you and your employer, the federal government takes 15.3% (= 2 times 7.65%) of

2. your income. If you're self-employed you pay the whole 15.3%.
So from your working income, the federal government taxes takes your 'income tax' you pay
according to your taxable income applied to the tax brackets and also gets 15.3% of your working
income too.
How much does the fed get from a single person making $80,000?
Let's take a person under age 65 who makes $80,000 for a salary and apply the two federal
income tax systems on his salary to see how much tax he generates for the fed.
For the 'income' tax system, we subtract off his tax free income - i.e. the tax threshold of $9,350
from his $80,000 - to get his 'taxable income' of $79,650 (= $80,000 less $9,350). This is applied
against the tax brackets as:
The first $8,350 is taxed at 10% tax rate to give $835
The next $25,600 is taxed at the 15% tax rate to give $3,840, and
The next $48,300 (but he has only $45,700 left) is taxed at the 25% tax rate to give $11,425
That results in a total 'income' tax of $16,100 which is 20.1% of his $80,000 salary.
For his 'payroll' tax as an employee he pays 7.65% of his $80,000 which is $6,120. His employer,
though, must pay the same 7.65% - another $6,120. So between the employee and his employer,
the fed gets 15.3% of his $80,000 which comes to $12,240. Note that an employee costs an
employer his income plus 7.65% more.
If the employee was self-employed with $80,000 of net income, he'd have to pay the full 15.3% for
'payroll' tax.
So the total tax paid to the federal government based on his working income comes to $28,340
made up of:
* 'income' tax of $16,100
* 'payroll' tax of $12,240 ($6,120 from employee and $6,120 from employer)
The employee pays $22,220 of this which is 27.8% of his salary. His employer pays the rest.
If he were self-employed with an $80,000 net business income, he'd pay all $28,340 taxes
Yes, $28,340 is 35.4% of an $80,000 working income. That's what the fed gets.
Someone making $80,000 per year is really not making a lot of money. The fed's 'take' is too
much now. Income taxes originally started at 1% for the very rich. And now the government is
planning to tax you more.
Shane Flait gives you workable strategies to accomplish your goals in financial, legal, tax,
retirement and protection issues.
Read his eBook: 'Wise Way to Financial Independence' =>

3. http://sovereignu.com/
Get his FREE report on Managing Your Retirement =>
http://easyretirementknowhow.com/FreeReportandSignUp.htm.
Article Source:
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==== ====
Here is some TAX tips before you file your 2011 TAX
www.nunez-services.com
==== ====