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Calculation error?

Posted: Sat Mar 05, 2022 3:07 pm
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

Re: Calculation error?

Posted: Sat Mar 05, 2022 3:13 pm
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.

Re: Calculation error?

Posted: Sat Mar 05, 2022 4:38 pm
by gary
Thank you. That makes perfect sense now.