The Tax Preparation Blog

Posts Tagged ‘calculator’

Isle home sale surge leads nation

Honolulu showed the biggest jump in home sales of any metro area in the nation last month as homebuyers set out to take advantage of temporary government tax incentives and lock in still-low mortgage interest rates.

Davos Annual Meeting 2010 – Redesigning Financial Regulation

Question: How can I calculate point of diminishing returns for overtime net pay after federal taxes?

How can I calculate point of diminishing returns for overtime net pay?

Workers earn a base pay of $26.55 per hour for a 40 week. Some workers work as much overtime as they can get, others only work 10 of overtime or less. The reason has caused a debate over the point of diminishing returns for working over time due to the amount of taxes that is taken out of the pay check after 10 hour. Basically it seems that the ratio between net pay and hours worked starts to drop after 10 hours. This is due to tax brackets, and the tax brackets are based on the IRS formW4 exemtions claimed.

So how do I get the numbers for the tax brackets based on all combinations of exempts, so that I can make calculations for point of diminishing return? I want to be able to graph hours worked and net pay after taxes.

Gross pay is ease to figure
40 hours x 26.55 x 1.0= $1062 (no overtime gross)
45 hours x 26.55 x 1.5= $1792 (5 hours of overtime gross)

how do i apply the federal tax withholdings?

Answer: I can understand that if, within a pay period, you work enough overtime hours, your withholding might be at a higher rate than if you hadn’t worked as much or any overtime. However, one point you seem to miss is that your tax liability (what you ultimately owe before withholding is accounted for) is only determined on an annual basis. I have yet to see a situation occur where the more a person works (on an hourly basis with overtime), he takes home less. The withholding can never amount to 100% of the additional income for that extra hour worked, unless you request unusually large specific dollar amounts to be withheld via a temporary Form W-4 filed with your employer. It is true that the more a person earns annually (and even within a pay period), the higher his top marginal tax bracket will be. However, the higher tax rate only applies to the last dollars earned–never to all the dollars earned as one moves through the rate schedule brackets.

Publication 15 contains the Federal income tax withholding tables for 2007. Using a spreadsheet program and these tables, you should be able construct the example you desire. The Wage Bracket method tables already have withholding levels for various withholding allowances up to 10, and the instructions on page 35 show you how to handle those over 10. For the Percentage tables the look-up amounts already have withholding allowances deducted from earnings (each one is a certain dollar amount depending on filing status). This seems to be a project that would take some effort. If it were me, I’d realize that the more hours I work the more net pay I take home (even if the extra dollars have a higher rate of tax withheld from them). Your real goal should be to gauge your withholding so that you don’t owe a lot at the end of the year, and don’t provide the IRS with an interest-free loan by having too much withheld.

Here’s the link for Publication 15. Your state should have similar tables available online.

http://www.irs.gov/pub/irs-pdf/p15.pdf

Accident Blocks Route 17 in Logan

Route 17 was blocked for a short time Tuesday after an accident.

Home based tax prep by a CPA

Question: Obama has a tax cut calculator, where’s McCain’s?

Or does his only kick in for incomes over $100,000,000

http://www.google.com/aclk?sa=l&ai=BkQ42V5YJSeSrIIicwQGalqjhDdnc3o4B14O9owrLxbesKKCcAQgAEAEYASCFiN8GOABQs7uPrAJgyYbFi8Sk_A-gAYHfk_wDyAEBgAIB2QMYnPHYj3Fp1A&sig=AGiWqty6j79HDJoi36ldUZz3B6d9FyMx_Q&q=http://taxcut.barackobama.com/%3Fsource%3Dsem-pm-fts-tc-search-us

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Answer: Be fair. McCain gives tax breaks for incomes as little as $50 Million / year

5 questions for the first-time homebuyer

Here’s what to ask yourself to make your first homebuying experience a success.

EEP100 – Lecture 14

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Fidelity® Provides Income-Based College Savings Guidelines as Study Shows Parents Projected to Meet Only 16% of Future …

BOSTON—-Fidelity Investments®, a leading provider of 529 college savings plans, today announced the results of its fourth annual College Savings Indicator study, which calculates how prepared parents are to pay for future college costs, whether they save on their own or with a financial advisor.

Lending on bank owned properties (reos) in California

Everyday I get quite a few questions regarding the American Recovery and Reinvestment Act of 2009 and how it would apply to buying a home using VA financing.

For those of you that don’t know, this act was initially passed as a “tax credit” to first time home buyers up to $8000 dollars.

Many groups like the National Association of Realtors petitioned lawmakers to monetize the tax credit which would allow buyers to use the credit as a form of down payment.

Using a tax credit as down payment mainly benefits FHA borrowers.

With a VA loan, borrowers already have 100% financing in place. Conversely, the FHA requires purchasers to make a 3.5% down payment. In those cases, a monetized tax credit could be used to offset closing costs and related transaction fees.

Technically speaking – VA borrowers could use the tax credit to buy down the VA funding fee.

The traditional VA funding fee is 2.15% for 100% financing. If a veteran puts more than 5% down in the transaction, the VA funding fee drops to 1.25%. For this to work with as little down payment as possible, the home purchase price would have to be $160,000 or LESS. Furthermore, this strategy only makes sense for Veterans intending to put the 5% down regardless of the situation. Otherwise, putting 5% down to save less than 1% in a VA funding fee is crazy.

A word of caution to all VA buyers.

Just because HUD may allow buyers to use tax credits as down payments, your bank may not. So, regardless of what people tell you, the BANKS make the rules. If you plan on using the tax credit in addition to your down payment, consult with your bank first. Failing to do so could result in a rude awaking. At the time of this writing, most banks DO NOT have a system in place for honoring down payment tax credits.

For your reading enjoyment I have also attached:

Here is also a brief excerpt taken from the National Association of Realtors website regarding the tax credit. Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer’s income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

Harbor Financial Online Tax Refund Estimator 2010. A Quick and Easy Tax Return Estimator

Estimating taxes online can be accomplished with a few clicks of the mouse. Taxpayers can calculate 2009, 2010 federal and state income tax return forms with the free tax estimator tool. This easy to use tax estimator has already factored in all of the new tax laws to keep the tax return up to date and accurate. (PRWeb Jan 21, 2010) Read the full story at http://www.prweb.com …

(My Income Online) Untouchable – Unbelievable