r/personalfinance • u/zonination Wiki Contributor • Jan 31 '15

Reminder: Khan Academy still has basic explanations on taxes in the U.S. This should help you with understanding tax brackets, deductions, and other related information. Taxes

Basically a repost from last year, but I felt the need to remind people that this resource exists. There are some simple explanations of tax law in the U.S. over at Khan Academy. Here are a couple links:

And since retirement accounts tie into deductions:

Let me know if there's anything related I should add to this list. Happy filing!

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u/dex1 Jan 31 '15

2015 brackets: http://taxfoundation.org/blog/irs-releases-2015-tax-brackets

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u/[deleted] Jan 31 '15

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u/FreeCashFlow ​ Jan 31 '15

You misunderstand. You'll only be taxed at 25% on the $500 above the bracket cut-off. The rest will be at 15% and lower.

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u/Bones_MD Jan 31 '15

So wait...let me get this straight. First 9225 is taxed at 10%, then everything up to 37.5k after that 9225 is taxed at 15% and so on?

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u/jmblock2 ​ Jan 31 '15

Yes

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u/Bones_MD Jan 31 '15

Oh my God that makes so much more sense now.

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u/[deleted] Feb 01 '15

Beautiful, isn't it? I love clever systems like this.

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u/Bones_MD Feb 01 '15

That really is amazingly clever and it really doesn't fuck any one particular person over. Wow that's actually a lot more balanced than I thought it was, and the top tax bracket is only attainable by the top five or six percent of earners in the US.

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u/[deleted] Feb 01 '15 edited Feb 01 '15

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u/[deleted] Feb 08 '15

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u/[deleted] Feb 09 '15

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u/[deleted] Feb 09 '15

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u/FreeCashFlow ​ Jan 31 '15

You got it! And don't forget, your taxable income is reduced by both the standard deduction and the personal exemption. In 2015 these will total $10,300. The deduction could be higher if you itemize, which depends on factors like state and local taxes, charitable giving, mortgage and student loan interest, medical expenses, etc.

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u/Bones_MD Jan 31 '15

Oh man. I may come out way ahead this year. Cheers man!

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u/TehFacebum69 Jan 31 '15

Does this apply in the UK as well (England, specifically)? I looked on the .gov page about it and I didn't really understand it.

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u/mtrain123 Feb 01 '15

Yes it is the same in UK. You pay 40% on income greater than £31k but 20% on anything below it.

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u/praneshp Jan 31 '15

Don't you pay the 25% only on the extra $500?

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u/[deleted] Feb 01 '15

Literally in the very thread where videos explaining tax brackets has been posted. You can lead a horse to water...

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u/rlbond86 ​ Feb 01 '15 edited Feb 01 '15

I apparently don't understand how taxes work.

TIL a lot of people don't know this

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u/ChefBoyAreWeFucked Feb 01 '15

I remember when I was little, and my parents explained how taxes worked (the wrong way). I said that didn't make sense and refused to believe them. Why can't people understand something so simple, that is explained when you do your taxes, especially when the alternative is counterintuitive.