Why does a $1000 increase in rental income cause my taxes to go up $308, more than the 25% tax rate that I am in?
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The 'extra' income can affect many other things on your tax return. It can decrease some credits and deductions, make more Social Security taxable, be subject to the 3.8% Net Investment Income tax, be subject to AMT, and more.
If you really want to know what is happening, print out your tax return with the $1000 increase, and then again without the $1000 increase. Then look at which lines on the Form 1040 change.
The 'extra' income can affect many other things on your tax return. It can decrease some credits and deductions, make more Social Security taxable, be subject to the 3.8% Net Investment Income tax, be subject to AMT, and more.
If you really want to know what is happening, print out your tax return with the $1000 increase, and then again without the $1000 increase. Then look at which lines on the Form 1040 change.
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