Income Tax Rates

Date: Sunday, September 21, 2008
Time: 11 PM
Place: Kitchen

Many people remember only whether they received tax refunds or owed money on their tax returns. But you should care how much you pay in taxes and the total and the marginal taxes that you pay, so you can make financial decisions that lessen your tax load. Although some people feel happy when they get refunds, you shouldn’t. All a refund indicates is that you overpaid your taxes during the previous year. When you file your income tax return, all you do is balance your tax checkbook, so to speak, against the federal and state governments’ versions of your tax checkbook. You settle up with tax authorities regarding the amount of taxes you paid during the past year versus the total tax that you actually are required to pay, based on your income and deductions. Last year, the IRS issued more than $200 billion in individual income tax refunds. If you figure just a 5 percent interest rate from a money market fund, taxpayers threw away more than $10 billion in interest on money that they could’ve invested.