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Wed Jan 8, 2020, 06:32 PM

Tax question.

I collect $73,000 in change in pension and S.S. That puts me at 22%.

In July, I hit an 18K casino jackpot, putting my gross at 24% bracket. I had them take out the taxes when they paid the winnings.

How much more am I gonna be owing?

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Reply Tax question. (Original post)
3Hotdogs Jan 2020 OP
unblock Jan 2020 #1
3Hotdogs Jan 2020 #2
progree Jan 2020 #3

Response to 3Hotdogs (Original post)

Wed Jan 8, 2020, 06:59 PM

1. Congrats!

Consult a proper tax advisor

But generally, only the incremental income is taxed at the 24% rate (actually done of it will be taxed at the 22% rate until you reach the max for that bracket)

The old $73k will still be taxed the same as it always was.

So assuming you were at the top of the 22% bracket, the extra tax would be $4,320.

So just compare that to the amount they withheld to determine the additional tax or refund come April.


Note that some cases are more complicated, for instance if you itemize and extra income puts you in a range where deductions are phased out, that can mean a higher effective tax rate.

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Response to 3Hotdogs (Original post)

Wed Jan 8, 2020, 07:21 PM

2. They took out $4,538

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Response to 3Hotdogs (Original post)

Wed Jan 8, 2020, 08:26 PM

3. Assuming you're single and take the standard deduction

And assuming that all of your Social Security is taxed (actually the maximum is that 85% of it is taxed):

73,000 Income not including casino
-12,200 standard deduction
------------------------------
60,800 taxable income not including casino.

It is the Taxable Income, not the gross income, that one enters the tax tables with.

A taxable income of $39,475 to $84,200 is the 22% tax bracket (2019 taxes)

They chose terminology that was designed to be confusing. But the idea is that the first $12,200 of your income is meant to be "free", and the remainder above that is "taxed", hence, "taxable income".

With the $18,000 casino winning, your taxable income is 60,800 + 18,000 = $78,800

Still within the 22% tax bracket. So the casino winning is all taxed at 22%.
$18,000 * 22% = $3,960.

Plus state taxes ....

That 15% or more of your Social Security is NOT taxed won't change this calculation -- the casino income will still all fall within the 22% bracket. (Well, I'm assuming you're around the 85% SS taxation point when I say that)

EDIT - Ooops, if you are over 65, your standard deduction is an additional $1650, so it is $13,850 instead of the $12,200 I showed in the above calculation. But even with that adjustment in your favor, your casino winnings will still all fall within the 22% bracket.

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