About a month ago, we wrote a blog post about how different your tax rate would be if you were to live in different areas of the country. There are drastic shifts depending on whether you live in an expensive city or a small, rural area. It depends if you’re married. If you have a child, that changes things. If you enter certain tax brackets, that changes your tax rate. If you live in certain states with varying rules about income tax, your tax rate changes again.
This tax talking point has made the headlines once again after a CNN reporter looked into the tax rates charged to a married couple with children that earns $100,000 in income. The reporter looked at three cities: Seattle, Topeka and Queens, New York. There was a range greater than $5,000 amongst the three cities when it came to this couple’s tax rate.
In Seattle, they were taxed $3,286. In Topeka, it was $6,618. And in Queens, it was $8,719. The reporter had to “assume” many different factors about their example family, such as how state laws applied to them, their 401(K) tax breaks and how much they contributed to charity.
In the end, though, this story is another reminder about how complex tax laws can be, and the need to understand these laws when you are dealing with your taxes. If that means bringing in an experienced tax attorney to help support you after you’ve been audited or been hit with a lien, then so be it. You need support when complicated tax issues come knocking at your door.
Source: CNN Money, “$100,000 income: Three very different tax bills,” Jeanne Sahadi, April 21, 2014