My friend is an undergraduate working a part-time job and I remember from when I was in a similar situation that there was some cut-off point of income where it became disadvantageous to cross it unless you made a significant amount more. I don't remember if below this point you had some of your federal taxes refunded or you just crossed to a higher bracket or something. I thought it was around $5000. Can any of you help me? I looked at the IRS students page and it wasn't very familiar.
Students and taxes
- Thread starter Reel
- Start date
Tax brackets:
10%: from $0 to $7,150
15%: from $7,151 to $29,050
25%: from $29,051 to $70,350
Of course, this (from Wikipedia) might be handy to know:
Contrary to popular belief, there is no situation in which a person ought to try to earn slightly less money ? or create tax deductions by giving money away to charities ? in order to "fall into a lower tax bracket" and lower one's tax burden across all of one's income. Reusing the example above, the myth is that a taxpayer earning $20,100 is in the 30% tax bracket, so if he could give away at least $100, he would drop down into the 20% bracket and pay one-third less tax in total.
The fact is that the above taxpayer is paying 30% tax on only $100 of his income ($30 tax). He's paying 10% on the first $10,000 of his income, and 20% on the next $10,000 of his income; the fact that he reached the 30% bracket doesn't change the tax he pays on the "bottom" $20,000 of his income. Put another way, a taxpayer in the 30% bracket earning $20,100 owes $3,030 in tax; whereas a taxpayer in the 20% bracket earning $20,000 owes $3,000 in tax. A person who wants to maximize his yearly income while factoring in taxation should simply try to earn as much money as possible; there is no "ceiling" above which it isn't profitable to earn money.
10%: from $0 to $7,150
15%: from $7,151 to $29,050
25%: from $29,051 to $70,350
Of course, this (from Wikipedia) might be handy to know:
Contrary to popular belief, there is no situation in which a person ought to try to earn slightly less money ? or create tax deductions by giving money away to charities ? in order to "fall into a lower tax bracket" and lower one's tax burden across all of one's income. Reusing the example above, the myth is that a taxpayer earning $20,100 is in the 30% tax bracket, so if he could give away at least $100, he would drop down into the 20% bracket and pay one-third less tax in total.
The fact is that the above taxpayer is paying 30% tax on only $100 of his income ($30 tax). He's paying 10% on the first $10,000 of his income, and 20% on the next $10,000 of his income; the fact that he reached the 30% bracket doesn't change the tax he pays on the "bottom" $20,000 of his income. Put another way, a taxpayer in the 30% bracket earning $20,100 owes $3,030 in tax; whereas a taxpayer in the 20% bracket earning $20,000 owes $3,000 in tax. A person who wants to maximize his yearly income while factoring in taxation should simply try to earn as much money as possible; there is no "ceiling" above which it isn't profitable to earn money.
Making too much might make you ineligible for some financial aid, but like wiki says (while confusingly mixing 2 tax tables) making more money only can cause the extra money to be taxed at a higher rate.
I am sure they are a dependent but I swear someone told me there was some magic number as a student but I have no idea.
- Oct 30, 2000
- 42,589
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Dependents fall into a sub-bracket (usually around half of the standard low income bracket). Roughly at $3500 they become hit for income tax. They are already getting the FICA tax withheld.
It is also based on the projection of the pay period
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