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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12173
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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Hi, I appreciate your help in answering these three specific

Customer Question

Hi, I appreciate your help in answering these three specific questions:

1) If my annual taxable income is $50,096 and I’m in the 25% tax bracket (filing as head of household), will the standard deduction get me down to the 15% tax bracket which tops out at $48,600?

2) I know my mortgage interest deduction will help offset some income, but it won’t drop it be the $1,400 needed to be in the 15% bracket. Can I put some of my income into a tax-deferred 401(k)/IRA plan to lower my income even more? Would that be a viable technique to lower my tax bracket?

3) Lastly, would I need to itemize or can all this be done using the standard deduction? Thank you.
Submitted: 9 months ago.
Category: Finance
Expert:  Megan C replied 9 months ago.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com.

Megan C :

First and foremost I would like to explain tax brackets to you. lowering your tax bracket won't lower your overall tax, except to the extent that you have reduced your taxable income.

Megan C :

Our tax system is tiered. You pay 10% tax on income in that bracket, then 15% on the next part of your earnings in that bracket, then 25%. Being in the 25% tax bracket simply means that your last dollar of earnings is taxed at 25%. Not 100% of your earnings.

Megan C :

Your taxable income is calculated by taking out the standard deduction, so I'm not sure what you mean by your taxable income being $50,096. If that's your after-tax pay for work then yes, the standard deduction will get you to the 15% tax bracket.

Megan C :

You may also put some of your funds in an IRA or 401(k) that would also help to lower your tax bracket as well.

Megan C :

You do not need to itemize to reduce your taxable income by paying into tax deferred accounts.

Megan C :

Do you have any further questions? If not, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today. Thanks again for being a valued JustAnswer.com customer.

Expert:  Megan C replied 9 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Expert:  Megan C replied 9 months ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer

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