Author Topic: 2015 challenge: keep track of true tax rate  (Read 3614 times)

Jags4186

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2015 challenge: keep track of true tax rate
« on: December 30, 2014, 10:22:42 AM »
Most everyone on MMM knows how to minimize their income taxes, knows about Roth IRA rollovers, etc.

How many people know how much they pay in taxes?  And I don't mean income taxes I mean all taxes, sales tax, use tax, etc.

In 2015 I plan on attempting to keep track of everything I do that incurs a tax, add it up, add it to my income and payroll taxes and come up with my true tax rate.

Anyone anal enough to try this with me?

FrugalSpendthrift

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Re: 2015 challenge: keep track of true tax rate
« Reply #1 on: December 30, 2014, 11:12:59 AM »
I started a cash flow statement with a section for taxes, so I know what most of my taxes were this year (federal, state, county, township, school), everything except for sales & use tax.  Looking at my yearly spending and my state's sales tax rate, I probably spent less than 1% of my total income on sales tax this year.  I like tracking metrics that I can influence, but I'm not sure what I would do with exact sales tax data.

Kingomri

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Re: 2015 challenge: keep track of true tax rate
« Reply #2 on: December 30, 2014, 12:37:49 PM »
Keep in mind that you should track the number of gallons of gas you use, since those have both state and federal taxes applied to them. Any other items like this?

This is an interesting idea. I think I might give it a go, since I already keep pretty detailed records.

Gone Fishing

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Re: 2015 challenge: keep track of true tax rate
« Reply #3 on: December 30, 2014, 12:49:48 PM »
Don't think I will play, but I'm real interested to see what you come up with.  Many people grossly over estimate their federal tax rate due to misundersanding the brackets, but I am guessing they probably unders estimate many of the other taxes.  Are you going to count car registration fees? Tolls?  Hunting/fishing licenses?  If you shoot, hunt, or fish, there are taxes baked into ammo, tackle and other items as well.  Also don't forget alcohol and tobacco taxes if you drink or smoke.  More power to you, as you are going to have to be very detailed to get it right!  Assuming you are in the $75-$150k income range, I predict you land somewhere around 35%. 

Jags4186

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Re: 2015 challenge: keep track of true tax rate
« Reply #4 on: December 30, 2014, 01:31:04 PM »
I guess I have 2 days to figure out my metrics! 

Re: gas...is the tax a pass through of the station (is the gas station taxed, then it increases the price to us) or is it like a sales tax?  I don't think I've ever seen a tax breakdown on a gas receipt.  Regardless, luckily for me my company pays for my gas so I wouldn't have to track that!

Tolls: yes and easy to track via EzPass

Registration/license fees: yes

Sales tax: yes

Alcohol: never thought about it...is there a tax on top of the sales tax that is on the receipt? 


FrugalSpendthrift

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Re: 2015 challenge: keep track of true tax rate
« Reply #5 on: December 30, 2014, 01:43:59 PM »
Alcohol: never thought about it...is there a tax on top of the sales tax that is on the receipt?
It's not on the receipt, but there are other taxes included in the price.  They can be very different state by state:
http://taxfoundation.org/article/state-gasoline-tax-rates-2009-2013
http://taxfoundation.org/article/state-excise-tax-rates-spirits-2007-2013
http://taxfoundation.org/article/state-beer-excise-tax-rates-2009-2013

Jags4186

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Re: 2015 challenge: keep track of true tax rate
« Reply #6 on: December 31, 2014, 02:03:03 PM »
Well good news is that New Jersey has the 3rd lowest tax on gas in the country!

The bad news is that they don't sell alcohol by the gallon so I'll need to do some conversions...that should be fun.

FrugalSpendthrift

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Re: 2015 challenge: keep track of true tax rate
« Reply #7 on: January 07, 2015, 06:12:56 PM »
Here's my true tax rates for 2014

Federal: 11.92%
SS: 4.33%
Medicare: 1.43%
State: 3.03%
Real Estate: 2.98%
Sales: 1.25%

Total: 24.94%

Cheddar Stacker

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Re: 2015 challenge: keep track of true tax rate
« Reply #8 on: January 07, 2015, 08:37:51 PM »
Here's my true tax rates for 2014

Federal: 11.92%
SS: 4.33%
Medicare: 1.43%
State: 3.03%
Real Estate: 2.98%
Sales: 1.25%

Total: 24.94%

How did you calculate 4.33% for SS? Some earned income, some passive income?

FrugalSpendthrift

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Re: 2015 challenge: keep track of true tax rate
« Reply #9 on: January 08, 2015, 06:17:01 AM »
How did you calculate 4.33% for SS? Some earned income, some passive income?
Social Security has a wage base, so anything income above that doesn't have social security tax.

Cheddar Stacker

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Re: 2015 challenge: keep track of true tax rate
« Reply #10 on: January 08, 2015, 07:46:51 AM »
How did you calculate 4.33% for SS? Some earned income, some passive income?
Social Security has a wage base, so anything income above that doesn't have social security tax.

Yeah, sorry, I'm an idiot. I too am lucky enough to benefit from that, I just forgot about it briefly.

RetiredAt63

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Re: 2015 challenge: keep track of true tax rate
« Reply #11 on: January 28, 2015, 08:43:27 AM »
Is SS a tax or a deferred pension plan?  Here CPP/QPP is a federal (provincial in Quebec) pension plan, so I would have counted deductions as part of pension savings, not a tax.

Lots of taxes are hidden - we have an excise tax on potable alcohol (i.e. the stuff at the liquor store), which is why ethanol (not denatured) for lab use is so strictly overseen.

How did you calculate 4.33% for SS? Some earned income, some passive income?
Social Security has a wage base, so anything income above that doesn't have social security tax.