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Reply to "How many of you JDs do not work anymore because it is not worth it financially?"
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[quote=Anonymous][quote=Anonymous] I don't think so. She's already in the top income bracket because of DH's income, so[b] all of her income is taxed at the top rate of 35% for federal[/b], plus 8.5% if she lives in DC, plus 7.65 percent payroll taxes, which equals just over 50%. .[/quote] No, no, no, no, no! I am consistently amazed at how ignorant people are of MARGINAL TAX RATES. The 35% top bracket only applies to a portion of the family's income. Everyone's first $10,000 is taxed at the same rate. If you are in the 35% bracket, you do NOT pay 35% of your total income in federal income taxes. My family is in the 25% bracket but our effective rate is much lower, maybe 15% once you count all of our deductions, exemptions, and credits. Here is a quick explanation of how marginal tax rates work: http://www.moolanomy.com/1800/how-do-marginal-tax-rate-and-effective-tax-rate-work/[/quote]
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