What is OmniNerd?

Welcome! OmniNerd's content is generated by you, the reader. Through voting and moderation we strive to highlight the nerdiest of what's around and provide content that's a little more thought provoking than other sites.

Submit New Content

Voting Booth

Choosing Sarah Palin as a Vice Presidential running mate was?

View Results, All Polls
42 votes, 9 comments
0
Nerd-Its
+ -

A correction

Comment comment by wyldeling on 01 August 2007

The situation is actually a bit more complicated than you indicate. The tax on the interest bearing savings accounts is not capped at 15%, but is included in your regular income via line 8a on form 1040 (instructions, p. 23). So, your interest rate is determined by your effective tax rate. For lower incomes, this may mean that the effective interest rate on your savings account is still higher than your on your mortgage. For example, due to the education tax credits for the Katrina and Rita effected areas, my effective federal tax rate has been 0% for the past two years, meaning that the savings account would have been the better option for me.

You are a viewing a subset of a larger discussion.
View Full Discussion
Star This to Save in Your Profile Favorite
Thread parent sort order:
Highest Voted : Lowest Voted : Oldest : Newest
Thread verbosity:
Expand All : Minimize Replies to Comments
0 Nerd-Its - +
RE: A correction by Brandon :: NR9

I'm not sure I follow you. If the tax rate on taxable interest is capped at 15%, then of course it can be lower (as in your case), but how do we know it can be higher? Can you assume simply because it is included as a line item that it is treated the same as salary/wages? I guess that would make sense (given the layout of form 1040), but how, then, do the Bush tax cuts take effect?

Posted 01 August 2007, Hide, Parent, Reply