THR has a promotion going on this month for where they are giving away a Camaro a day for the month of August. Value of the car is almost $35,000 or you can take $20,000 in free play to be used within 7 days or $20,000 cash.
I would love to have the car, but considering the tax implications which would affect your AGI and potentially place you into a higher tax bracket of you take the car or cash, I wonder if the FP is the best option since FP is non taxable unless you hit a HP with the FP. Although, unless you are at the higher end of your tax bracket, it may not be much of a consideration. I'm thinking federal tax only as luckily Florida does not have state income taxes.
Table 1. 2016 Taxable Income Tax Brackets and Rates (Estimate)
Rate Single Filers Married Joint Filers Head of Household Filers
Source: Author’s Calculations.
10% $0 to $9,275 $0 to $18,550 $0 to $13,250
15% $9,275 to $37,650 $18,550 to $75,300 $13,250 to $50,400
25% $37,650 to $91,150 $75,300 to $151,900 $50,400 to $130,150
28% $91,150 to $190,150 $151,900 to $231,450 $130,150 to $210,800
33% $190,150 to $413,350 $231,450 to $413,350 $210,800 to $413,350
35% $413,350 to $415,050 $413,350 to $466,950 $413,350 to $441,000
39.6% $415,050+ $466,950+ $441,000+
What would you do?
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