Calculation error?

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gary
Posts: 2
Joined: Sat Mar 05, 2022 2:56 pm

Calculation error?

Post by gary »

I'm entering additional income from contract work using:
"Specify additional Cash Flows such as Retirement Savings, Retirement Income, and Expenses"
I seem to get unusual results when I test at two extremes:
$50,000 at 100% tax rate is much better than $0 at 0% tax rate.
I would have expected both settings to have zero affect on the graph. Why is $50,000 at 100% tax rate showing such a significant improvement? Shouldn't $50,000 at 100% tax rate be the same as nothing?
Sincerely,
Gary
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: Calculation error?

Post by jimr »

The taxable percent parameter isn't a tax rate. Rather, it's the percent of the cash flow that's subject to taxes.

So the total amount of taxes deducted from the cash flow = cash flow amount x taxable percent x income tax rate.
gary
Posts: 2
Joined: Sat Mar 05, 2022 2:56 pm

Re: Calculation error?

Post by gary »

Thank you. That makes perfect sense now.
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