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Not taking into account the standard deduction. This is especially evident in the lowest income totals.

Jacquass12321 14y ago
That'd be why the taxes it listed me as paying previously seemed high.
twoodfin 14y ago
People have lots of deductions, exemptions and credits (think 401(k), home mortgage interest, and health plans). It's impossible to make a simple calculator based purely on top line paycheck income for that reason. Just estimate your AGI, and it'll be about right.
- ajross 14y ago
  No, as pointed out it's basically never right for anyone[1]. It doesn't cover huge deductions like mortgage interest, it doesn't include the EITC at all, which means that it's wildly overestimating tax liability at the bottom of the chart (where it's routinely negative for families with children). Tax analysis is hard (and yes, that's a bug not a feature) and not well served by charts like this, nor by ridiculous labels like "fiscal cliff". [1] With the exception that probably explains your comment: a single mid-income individual without dependents living in rental housing is going to pay pretty much what this chart shows. Obviously that covers a lot of the demographic here, but it's terrible advice for everyone else.
  - twoodfin 14y ago
    You're right. I confused AGI (line 37 on the 1040) with taxable income (line 43). And of course even that doesn't account for a variety of credits including EITC. But everyone should have some idea what their taxable income is, and what credits they're eligible for. If the former is X and the latter is Y, you can take Chart(X) - Y and it will be fairly accurate for you.
- TomatoTomato 14y ago
  The standard deduction is the minimum deduction. A simple calculator indeed should take this into account since it will affect everyone's tax liability. A recent study showed only about 1/3 of tax returns used itemized deductions [1]. [1]: http://taxfoundation.org/article/most-americans-dont-itemize-their-tax-returns http://taxfoundation.org/article/most-americans-dont-itemize... edit: good point on the EITC as well. This also severely affects the bottom of the scale and you don't need to itemize to take advantage of it.

That'd be why the taxes it listed me as paying previously seemed high.

People have lots of deductions, exemptions and credits (think 401(k), home mortgage interest, and health plans). It's impossible to make a simple calculator based purely on top line paycheck income for that reason. Just estimate your AGI, and it'll be about right.

ajross 14y ago
No, as pointed out it's basically never right for anyone[1]. It doesn't cover huge deductions like mortgage interest, it doesn't include the EITC at all, which means that it's wildly overestimating tax liability at the bottom of the chart (where it's routinely negative for families with children). Tax analysis is hard (and yes, that's a bug not a feature) and not well served by charts like this, nor by ridiculous labels like "fiscal cliff". [1] With the exception that probably explains your comment: a single mid-income individual without dependents living in rental housing is going to pay pretty much what this chart shows. Obviously that covers a lot of the demographic here, but it's terrible advice for everyone else.
- twoodfin 14y ago
  You're right. I confused AGI (line 37 on the 1040) with taxable income (line 43). And of course even that doesn't account for a variety of credits including EITC. But everyone should have some idea what their taxable income is, and what credits they're eligible for. If the former is X and the latter is Y, you can take Chart(X) - Y and it will be fairly accurate for you.
TomatoTomato 14y ago
The standard deduction is the minimum deduction. A simple calculator indeed should take this into account since it will affect everyone's tax liability. A recent study showed only about 1/3 of tax returns used itemized deductions [1]. [1]: http://taxfoundation.org/article/most-americans-dont-itemize-their-tax-returns http://taxfoundation.org/article/most-americans-dont-itemize... edit: good point on the EITC as well. This also severely affects the bottom of the scale and you don't need to itemize to take advantage of it.