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Taxes

What is the difference between marginal and effective tax rates?

Let’s say your and your spouse’s taxable income is $110,000 in 2020. NOTE that your taxable income is calculated after all the tax deductions. So your actual total earned income would be higher than $110,000. For the tax year 2020, we have the standard deduction of $24,800. Assuming you did not have any other deductions […]

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401k HSA IRA Roth IRA Taxes

What to do with your money – 401(k), HSA, IRA, Roth IRA, Emergency Fund, Debt? The Right Sequence!

Many people have this question of where they should invest money first. It really depends on your situation, on your age, on your current income, on your projected future income, current income tax rates, and future expected income tax rates. Currently, federal tax rates are at an all-time low. Most pros agree that in the […]

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IRA Roth IRA Taxes

What is Modified Adjusted Gross Income (MAGI)?

What is Gross Income (GI?) Gross Income is your total income from salary (wages), interest earned, and dividends. It also includes alimony, capital gains, business income, royalty income, rental income, unemployment income, retirement distributions, and other income What is Adjusted Gross Income (AGI)? It is Gross Income (GI) minus certain payments you’ve made during the […]

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IRA Roth IRA Taxes

The Ultimate Guide to Backdoor Roth IRA you will ever need

What is an IRA? IRA stands for Individual Retirement Arrangement. Its an investment account for your retirement savings. However know some tax tricks ad how to access money – you can use it as a rainy day fund account, highly leveraged investment account, etc. Now with this investment account, you can invest in all those […]

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401k HSA IRA Taxes

Federal Income Tax Brackets

Tax Year 2020 Federal Income Tax Brackets (Due April 2021) Tax rate Single MFJ MFS Head 10% $0 to $9,875 $0 to $19,750 $0 to $9,875 $0 to $14,100 12% $9,876 to $40,125 $19,751 to $80,250 $9,876 to $40,125 $14,101 to $53,700 22% $40,126 to $85,525 $80,251 to $171,050 $40,126 to $85,525 $53,701 to $85,500 […]