3 ms·

Can you explain what people confuse about income taxes?

• moonka 9y ago
  In my experience the confusion surrounds 2 things. How brackets and deductions work. Many people don't understand that once your income goes into a higher bracket, you are only taxed at that higher bracket for the income that pushes you into it. For deductions, I've met a lot of people who think that it works essentially as a credit, rather than just saving you your tax rate on that portion.
  • Domenic_S 9y ago
    It's wording like that that's confusing. Once your income goes into a higher bracket, you are only taxed at that higher bracket for the income _that falls within that new bracket._ The income that _pushed_ you into that bracket is taxed the same way. (and AGI does affect deduction phase-outs so there's that complication...)