Evolving Personal Finance » Entries tagged with "marginal tax brackets"

Where’s the Tipping Point Between a Roth and Traditional IRA?

November 14th, 2016 | 3 Comments

Where’s the Tipping Point Between a Roth and Traditional IRA?

I love my Roth IRA (and my Roth 401(k)). Throughout my twenties, I didn’t have access to a workplace-based retirement account, so the IRA was a retirement-life-saver. I also was not making much money as a grad student, so using a Roth made total sense. When I speak to current grad students, I advocate using a Roth IRA for retirement savings. But at some point, doesn’t a traditional IRA or 401(k) start to make more … Read entire article »

Filed under: retirement, taxes

Marginal Tax Brackets, Deductions, and Credits Explained Graphically

March 25th, 2013 | 30 Comments

Marginal Tax Brackets, Deductions, and Credits Explained Graphically

Many US taxpayers have a difficult time understanding what marginal tax brackets are and the differences between credits and deductions.  I will illustrate these three concepts for a hypothetical single taxpayer, Alex.   Alex’s Gross Income   Alex’s gross income is $225,000, all from his job, shown in solid red.     Deductions   Deductions reduce your amount of taxable income.   Alex has deductions that can be found in lines 23 to 35 of his 1040 in the amount of $15,000 (patterned red).  Examples of … Read entire article »

Filed under: taxes