were paid, and then figures the taxes by adjusting the taxable incomes for the alimony paid and received. The difference between the two sets of taxes are the tax costs/benefits of the alimony.
The program does not simply use a combined marginal tax rate since the income shift of alimony can cause a party to "straddle" tax brackets. The Taxes Page shows you which year's tax rates are being used. Since the IRS releases the tax rates at the outset of each tax year and the South Carolina Department of Revenue releases theirs at the end of the year, the South Carolina tax rates will always be a year "behind." The difference in South Carolina taxes from one year to the next should be immaterial though.
The tax code starts to cut back or phase out the amount of allowable itemized deductions and exemptions as incomes exceed a certain threshold. This program makes those adjustments.
The amount of exemptions and itemized deductions that are shown on the Taxes Page are those amounts based on the incomes without regard to payment of alimony, but, in calculating the taxes after payment of alimony, the program will actually adjust internally the allowable deductions and exemptions. It is simply not shown on the screen. If you click on the burgundy Taxable Income (w/ alimony) number, you will see a screen that shows how that taxable income was calculated.
If you compare the taxes that are calculated by the Alimony Calculator™ with the taxes shown by tax return software, such as TurboTax or TaxCut, or with an actual tax return, you may find the taxes to be $1 to $10 or so different. This is because the Alimony Calculator™ uses the tax rate schedule, whereas these programs may use the Tax Tables.
One other thing: Since the Alimony Calculator™ uses the child care tax credit on the Taxes Page, the Disposable Monthly Income Calculations Page uses a gross (pre-tax credit) amount of child care on the line labeled "Additional Child Support Items". To use the net child care figure on the Disposable Monthly Income Calculations Page would result in "double- dipping" the child care tax credit.
The Alimony Calculator™ does not calculate the Alternative Minimum Tax or the Earned Income Credit, yet. I hope to provide them is a future release. The Alternative Minimum Tax can be a significant item in some cases, and the Earned Income Credit can be important in lower income cases.
If you want to double-check the federal tax calculations or just run some taxes yourself, TurboTax has a great Web site with a simplified tax program that will quickly and easily calculate taxes online. The Web address is:
The Taxable Income amounts shown (both with and without alimony) are the Federal Taxable Incomes. South Carolina requires certain adjustments to the Federal Taxable Income, such as adding back in itemized state income taxes. Also, the Income Page has a place where you can enter certain South Carolina income adjustments, such as National Guard pay. The program