According to my math, a first year driver making $37,000 a year takes home more than a $40,000 year

Also, you're only looking at standard deduction. Add in a wifey or kiddos, you pay a lot less. If you own a house, keep track of all your road expenses in addition to per diem, clothing and work boots etc, your taxable income will be pretty low.

 

I respectfully disagree, although I understand where that feeling comes from. His point is not valid. It comes from a misunderstanding of tax brackets. There is no income threshold where, if you go over, you will pay way more money in taxes than the extra amount you earned (although people claim this all the time).

Using that misunderstanding, a person earning $37,651 would pay over $9,400 in taxes, whereas a person earning $1 less would pay under $5,700 in taxes. IT DOES NOT WORK THAT WAY. I $1 increase in earnings WILL NEVER penalize you $3,700.

That was his point. It is not valid.

 

Ok then tell me how a tax program will calculate federal income tax on 65,000 AGI that is after deduction and credits

 

So your total adjusted gross income is 65000

SS gets paid 1st your portion if employed is roughly 8%. If self employed or 1099 is roughly 16%

65000-37700=$27200 taxable at 25%

37700-10000=27700 taxable at 15%.

10,000 is taxable at 10%

There is your formulas you do the math.

 

Well actually the first 8,000 isn't taxed

 

Heres a chart on the new rates, which is pretty close to what Tommy said. It just makes it a little easier to calculate without having to do all that math.
http://www.forbes.com/sites/kellyph...ions-exemption-amounts-and-more/#ae196c4792eb

 

If you're referring to the standard deduction + personal exemption, he mentioned Adjusted Gross Income, which includes whatever deductions and exemptions he claims.

 

I think hes referring to the rule that says if you make 8000 or less, you dont have to file a tax form?

 

Maybe that's it.

For 2015, the standard deduction was $6,300 for a single filer, and the personal exemption was $4,000. So a single person with no kids won't pay taxes on the first $10,300.

 

I was thinking they raised the 8,000 to 9,000 but not sure since it never applies to me lol. They suggest you file anyway in case you can take the low income credit.