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Contributing a deductible $1,000 will lower the taxable income with the $30,000 a year person from $20,650 to $19,650 and save taxes of $150 (=15% of $1000). For your $100,000 every year person, his taxable income decreases from $90,650 to $89,650 and saves him $280 (=28% of $1000) - almost double the amount of!
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Some people receive transfer pricing a big fat refund every year because great deal is being withheld from their weekly or bi-weekly paydays. It wasn't until a few years ago that an addict of mine came and asked me why I didn't worry lots of about the $275 tax refund I received.
Filing Considerations. Reporting income isn't a requirement everyone but varies your amount and kind of pay. Check before filing to the business you are eligible for a filing exemptions.
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