How to calculate tax

Any investment that is hold for less than 1 years are taxed the same way as normal income. This is how you calculate your tax.

It is based on how much money you earn. You don't simple calculate the value of your income by the percent. You have to break it down into different brackets. Let's use the 2011 Tax Bracket for example.

U.S Tax bracket 2011

Marginal Tax Rate	Single	Jointly
10%	$0 – $8,350	$0 – $16,700
15%	$8,351– $33,950	$16,701 – $67,900
25%	$33,951 – $82,250	$67,901 – $137,050
28%	$82,251 – $171,550	$137,051 – $208,850
33%	$171,551 – $372,950	$208,851 – $372,950
35%	$372,951+	$372,951+

Like you earn $8,000, you can do $8,000 *10%. But if your income is $8,351, which is $1 above the 10% bracket, then you have to do it this way. $8,350*10%+($8,351-$8,350). This way is to make it fair. So if you are a little above the range of 10%, you still pay 10% for the income that is within the range. The amount over the 10% range is calculated separately

So this is the equation for Single/individual:

Income less than or equal to $8,350

•Federal Tax = Your_income*(0.10)

Income between $8,351– $33,950

•Federal Tax = $8,350(0.10) + (Your_income-$8,350)(0.15)

Income between $33,951 – $82,250

•Federal Tax = $8,350(0.10) + ($33,950-$8,350)(0.15) + (Your_income-$33,950)(0.25)

Income between $82,251 – $171,550

•Federal Tax = $8,350(0.10) + ($33,950-$8,350)(0.15) + ($82,250-$33,950)(0.25) + (Your_income-$82,250)(0.28)

Income between $171,551 – $372,950

•Federal Tax = $8,350(0.10) + ($33,950-$8,350)(0.15) + ($82,250-$33,950)(0.25) + ($171,55-$82,250)(0.28) + (Your_income-$171,550)(0.33)

Income greater than $372,951

•Federal Tax = $8,350(0.10) + ($33,950-$8,350)(0.15) + ($82,250-$33,950)(0.25) + ($171,55-$82,250)(0.28) + ($372,950-$171,550)(0.33) + (Your_Income-$372,950)(0.35)

Example 1: Your annual income is $500,000

Federal Tax = $8,350(0.10) + ($33,950-$8,350)(0.15) + ($82,250-$33,950)(0.25) + ($171,550-$82,250)(0.28) + ($372,950-$171,550)(0.33) + ($500,000-$372,950)(0.35)

Federal Tax = $152,684

So you income after federal tax is $500,000-$152,684=$347,317

Example 2: Your annual income is $50,000

Federal Tax = $8,350(0.10) + ($33,950-$8,350)(0.15) + ($50,000-$33,950)(0.25)

Federal Tax = $8,687.50

So you income after federal tax is $50,000-$8,687.50=$41,312.50

Example 3: Your annual income is $5,000

Federal Tax = $5,000(0.10)

Federal Tax = $500

So you income after federal tax is $5,000-$500=$4,500