Author Topic: What is the 14k exemption in regards to tax returns?  (Read 1820 times)

finitelement

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What is the 14k exemption in regards to tax returns?
« on: January 29, 2015, 07:37:50 AM »
I was able to get my effective tax rate down to 8.2%.  I made 56.5k (raise came later on in the year), only approx $1500 in 401k, and was able to deduct $5500 IRA, along with other things like my furnace.  Effectively bringing my taxable income down to approximately 34k.  My AGI was about 51k. Did I mess something up? 
Someone was saying that there was saying that "your taxable CT income would be $59k - ($6k 401(k) + $5500 IRA + $14k exemption) ~= $34k, and your tax bill for CT would be about $1500, for an effective rate of about 2.5%"
What is the $14k exemption?

Kingomri

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Re: What is the 14k exemption in regards to tax returns?
« Reply #1 on: January 29, 2015, 08:14:56 AM »
You're going to have to provide more detail as to the context of the conversation to get a better response, but my best guess is they were referring to the combination of the standard deduction and personal exemptions:

Standard Deduction is $6,200 for Single filers and $12,400 for Married Filing Jointly. Personal Exemptions are $3,950 per person. Extrapolating out a bit, if the context involves a single parent of one child, that would mean a standard deduction and two personal excemptions, or $14,100.

In fact, this person said "Your taxable income would be ~$34k" and you yourself said "...bringing my taxable income down to approximately $34k," so what's the discrepancy?

finitelement

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Re: What is the 14k exemption in regards to tax returns?
« Reply #2 on: January 29, 2015, 08:20:58 AM »
My effective tax rate sounds like it should be lower?

Numbers Man

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Re: What is the 14k exemption in regards to tax returns?
« Reply #3 on: January 29, 2015, 08:26:31 AM »
I'm intrigued by how the furnace reduced your taxable income. Details please.

finitelement

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Re: What is the 14k exemption in regards to tax returns?
« Reply #4 on: January 29, 2015, 08:31:09 AM »
Energy efficient natural gas furnace from an old oil fired hunk of metal, first time doing my own taxes with turbotax, it walked me right through it.

finitelement

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Re: What is the 14k exemption in regards to tax returns?
« Reply #5 on: January 29, 2015, 08:33:35 AM »
Well, a credit I guess? Not really an income deduction is it? I'm very new to this...

historienne

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Re: What is the 14k exemption in regards to tax returns?
« Reply #6 on: January 29, 2015, 08:36:29 AM »
It sounds like the person you're referencing was referring to your effective state tax in Connecticut.  8.4% is way too high to be a CT state tax rate - is that your effective federal rate?  Or combined rate?

finitelement

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Re: What is the 14k exemption in regards to tax returns?
« Reply #7 on: January 29, 2015, 08:55:20 AM »
It sounds like the person you're referencing was referring to your effective state tax in Connecticut.  8.4% is way too high to be a CT state tax rate - is that your effective federal rate?  Or combined rate?

Uh oh, Sorry I messed up, that was my effective federal rate lol