what was your 2012 effective federal income tax rate?

[disneysteve]

wow - all these single digits - married filing jointly, we were at ~17% this year - ~30% last year. Not really sure how people are getting to such a low effective tax rate.

I'm wondering as well but I suspect it is due to deductions I'm probably glad I don't have.

[feh]

I'm wondering as well but I suspect it is due to deductions I'm probably glad I don't have.

I assume it's most likely deductions and/or less income.

We no longer have a mortgage, so we can only itemize every other year, by bunching property taxes.

[mgkimsal]

We refinanced in 2011, and went from ~8% down to ~4%, so that reduced our interest deduction certainly, but it also meant a heck of a lot more money in my pocket each month. I have variable income, and have grown to value having liquid cash available moreso than I used to.

Going from a 30% tax rate to 18% was primarily due to engaging a CPA and having him sort out some things for me. Intellectually, I knew what I should be doing, but a) had been afraid of making mistakes and b) not really being able to find enough time to research things properly to ease my mind about A. Our CPA helped restructure some aspects of my business, has helped me file correct paperwork on time, and has been a very useful ally to have so far.

[MonkeyMama]

The lower tax rates are probably mostly due to kids. Higher tax rates are mostly due to higher incomes (which limits deductions and credits even if otherwise eligible).

The elephant in the room is AMT. The higher tax rates are either due to very large incomes and/or AMT.

I get a lot of comments that as a tax person I must *know the tricks.* There is nothing tricky about this scenario for a family of four (using 2013 tax rates, which are similar to 2012):

Household Income: $130,000
Minus 401k contributions: -$30,000
AGI: $100,000
Minus 4 exemptions: -15,600
Minus standard deduction: -12,200
Taxable Income: 72,200
Taxes before credits: $9,983 (10% & 15% tax rates)
Child Tax Credits (2): 2,000
Net Tax: $7,983

Effective tax rate 8% (Net tax divided by AGI)

This is a pretty simplistic scenario, with a *nice* income, but the tax rate is only 8%. Once you get into the married $150k+ income range you start to lose deductions and get slammed pretty hard by AMT. {The one *trick* I do know is that I get too keep a very huge percentage of my income if I stay out of AMT and out of the higher tax brackets. I am not saying I would never accept a higher income, but the taxes should be factored when determining the usefulness of any higher salary offer. The tax code is not exactly logical and there are scenarios where more gross does not equal more net}.

[parafly]

Married, filing joint, no kids

14.70% in 2012.

[mgkimsal]

This may be too political, but... for those of you paying single digit tax percentages (4%? 2%?!) do you still have some feeling of "I pay too much in tax!"?

[disneysteve]

Household Income: $130,000
Minus 401k contributions: -$30,000

This is what screws up my numbers. I have a good income but no retirement plan. I have no pre-tax retirement savings. Just a Roth and taxable accounts.

[MonkeyMama]

This may be too political, but... for those of you paying single digit tax percentages (4%? 2%?!) do you still have some feeling of "I pay too much in tax!"?

Are you kidding? Heck no!?!

I actually thought it was absolutely ridiculous the year I got a refundable credit for choosing to take time off work for maternity leave (we had ample savings, and tax-free benefits as well. I looked it up and my AGI was $56k that year. ) & I feel this way living in a high-cost state where $56k income doesn't stretch near as far as it does in other parts of the country. & of course, we would be absolutely slammed by AMT if my spouse got a job, which I also think is totally ridiculous. Am I filthy rich or dirt poor? Make up your mind, government.

[MonkeyMama]

This is what screws up my numbers. I have a good income but no retirement plan. I have no pre-tax retirement savings. Just a Roth and taxable accounts.

I am in the same boat. Since we are doing tax as percentage of AGI, this doesn't really matter. AGI is after retirement deductions. Did you use the right numbers? I am not sure everyone did.

[KTP]

married, joint: 22.1%

compared to you guys, I definately feel we are paying too much tax!

[feh]

This may be too political, but... for those of you paying single digit tax percentages (4%? 2%?!) do you still have some feeling of "I pay too much in tax!"?

Yes, I'd prefer this thread not get political. Let's just remember that federal income tax is not the only tax posters are paying.

[KTP]

Yes, I'd prefer this thread not get political. Let's just remember that federal income tax is not the only tax posters are paying.

Truth. Add in ~4% for SS, 2.2% for medicaid, 6% for state, 3% for property and sales taxes (estimate) and we are at an effective tax rate of 35% or so.

[mgkimsal]

Yes, I'd prefer this thread not get political. Let's just remember that federal income tax is not the only tax posters are paying.

Yes, certainly you're right - we all pay other taxes as well. I do sometimes run across people who complain about paying too much in tax, yet when you look at their actual tax numbers, it's generally a pretty low percent (like we've seen here), and the source of their money issues is generally over-spending or lack of control in other areas.

[mgkimsal]

Truth. Add in ~4% for SS, 2.2% for medicaid, 6% for state, 3% for property and sales taxes (estimate) and we are at an effective tax rate of 35% or so.

it always tends to get complicated simply adding up these numbers, because at least for some things - property tax here, for example - those are deductible in their own right. My 2% property tax isn't something I can just tack on to a 15% rate and say I'm paying 17%, because the 2% affects the 15% as well (or something like that). All in all terribly confusing, and I'm far more inclined to support a much much much more simplified tax system, but *only* if it was a replacement for what we have, not an extra layer on top of the current morass.

[KTP]

it always tends to get complicated simply adding up these numbers, because at least for some things - property tax here, for example - those are deductible in their own right. My 2% property tax isn't something I can just tack on to a 15% rate and say I'm paying 17%, because the 2% affects the 15% as well (or something like that). All in all terribly confusing, and I'm far more inclined to support a much much much more simplified tax system, but *only* if it was a replacement for what we have, not an extra layer on top of the current morass.

yes you can add them on, because the effective tax rate we are all posting already includes the deductability of things like real estate taxes and state taxes.

SS you may be justified in saying you can't just add it on because you may get something from it down the road, but also it will be 6.2% (or even as much as 12.4% depending on how you view it).