If I asked you today, where does a big portion of your paycheck go to besides taxes, you could easily tell me, otherwise see last week’s post Do you understand your taxes? Most likely, your answer ranges from mortgage to car payment and cell phone. But do you know where the big portion of your taxes goes?
When we pay taxes, we hand over large portions of our annual income in chunks bigger than most. This money is used to pay everything from roads, public programs, military, etc.
The $3.95 trillion in taxes in 2016 was spent as follow:
- 24% Social Security
- 15% Medicare
- 15% Defense
- 13% Health
- 13% Income Security
- 6% Net Interest
- 5% Veterans
- 6% Other
- 3% Education
The above are average numbers; many of them, like Defense, have decreased below 5%. Ultimately, though, the numbers add up to 100%. If you want to increase spending in one area, you must sacrifice another.
Now, when you hear any politician talking about increasing or decreasing the budget of any program, you know something else will be affected in turn.
Alex Lopez O’Bryan
The regulatory agencies required all offers of buying and/or selling to be registered unless they are exempt. When an offer is exempt, they are frequently called private placement. Private placements are not subject to certain laws and regulations that are put in place to protect investors.
Many factors must be evaluated before you invest in an exempt offer. These are five things one should review before diving into one of these deals:
2016 is over and so are your payments to the IRS for that year. We all know about tax brackets based on income (if you don’t, visit our post), but how do you compare to your neighbor?
The IRS says in 2015, Americans filed over 150 million tax forms, earning $10 trillion in adjusted gross income (gross income [full paycheck plus any additional income] minus deductions). The recorded tax liability reached almost $1.5 trillion. So, the average American made approximately $67,000 and paid almost $10,000 in taxes. This is 14% of your gross income and change.
Wait a second! How come you are paying a lot more than 14%? There are Americans who are low-income and subject to the Earned Income Tax Credit or EITC. Excluding these returns, the average percentage increases to over 20%.
To this, you must add Social Security (SS) and Medicare. These are taxes deducted irrespective of citizenship. In case you didn’t know, these two deductions are charged by your employer and you directly. Hence, combined can add up to 12.4% for SS and 2.9% for Medicare.
I think by now, you can see that on average the initial tax on your income of 14-20% + SS 12.4% + Medicare of 2.9% adds up to the range of 29.3% – 35.3%.
Remember, there are many variables to how much taxes you pay. Overall, the next time you look at your income return, compare your deductions against your income and find out where you stand among Americans.
To read more about tax strategies, click here
Alex Lopez O’Bryan