Jeremy's almost but not quite entirely moribund blog

Wednesday, December 20, 2006

Tax brackets, for dummies

I recently agreed to do some consulting work for a company I used to work for full-time. Yesterday, I talked to my neighbor, an accountant, about the tax implications of being an independent contractor in addition to earning a regular paycheck. One of my concerns was that earnings from my contractor work would push me into a new tax bracket and I could wind up consulting for less than nothing after Uncle Sam took his cut.

Well, turns out tax brackets don't work that way. If my total income breaks $100 into the next tax bracket, only that $100 is taxed at the higher rate.

Okay, that's good to know. Now all I have to worry about is the Alternative Minimum Tax...


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