How Do Federal Income Taxes Work? (Part 1 of 3)

Confused about taxesLike most people I know, I was never taught the basics of personal income taxes. But over the years, I’ve developed a simplified understanding of taxes. As a disclaimer, I’m far from a tax expert. You might be reading this as a far more knowledgeable tax guru. But I’m writing this to someone that has never learned how taxes work. Someone that shows up at the tax preparer’s office every year and just hopes to survive and walk out of there with a check coming their way. Someone that just puts a “2” on their W-4 and lets it ride year after year because they don’t know what it means to adjust that and how it affects their paycheck and their tax return. I hope that my simplified example and terms are helpful for you.

Part 1 – Good News: Only a Portion of your Money Gets Taxed!

The first step is not a difficult concept, but it’s critical. As an individual or a family, you’ve earned a certain about of money in the calendar year. But before you can get into tax tables and credits and determining how much money the federal government says that you owe, you need to figure out what portion of your income that you’re actually getting taxed on.

EXAMPLE Tax Calculationsw-2-wage-and-tax-statement

[Instead of throwing theory and algebra at you, it will be clearer to use an example. In this example, we have a married couple with 2 young children.]

Start with how much you made (wages, dividends, interest, etc.)


$67,500 total household gross income

Simple enough. It doesn’t matter if you have 1 income source or 10 income sources in your family, just throw it all into bucket to see what your total income is.

In your paycheck you’ll have a variety of items that are deducted from your take home pay. Some of those items are deducted BEFORE your taxes are calculated. The Federal government will not tax you on items such as: health insurance, dental insurance, Health Savings Accounts (HSA). Also, a Traditional 401k retirement plan is federal tax-free until you withdraw it when you retire.

So in our example, throughout the year 2014:

$3500 is withdrawn for Traditional 401k retirement

$5500 is withdrawn for health insurance premiums and HSA

So the government says, really you made $67,500 – $3500 – $5500 =

$58,500 this is your Adjusted Gross Income (AGI); your starting point for taxes

But the government doesn’t tax you on all of that income. They adjust it down further using personal exemptions and deductions. Don’t let the fancy IRS words confuse you. They really just subtract a little more from your income (AGI) before they start calculating how much money you made that they’re going to tax you on.

Personal exemptions are determined by your family size. So a married couple with 2 kids (under 19 or under 24 and full-time student) would have 4 deductions of $3950 per person (2014 value):

$3950 X 4 = $15,800 in personal exemptions

There are 2 options for your deductions. The first option is to itemize. There is a whole list of “tax deductible” items (you often hear people say that you can “write something off”). The most common things for most families would be charitable donations and mortgage interest. (If you give a lot to charity, pay a lot of mortgage interest, or otherwise know that you have a lot of “write off” items, you’ll need to learn a little more about itemizing) For the sake of simplicity, we’ll take the other option, the standard deduction. For a married couple, this a flat amount determined by the IRS each year. In 2014, it will be $12,400. (So you’d have to have donations, mortgage interest, and other tax-deductible items in excess of $12,400 in order to justify adding complication to your taxes and itemizing all of your deductions in order to reduce the amount of taxes you owe.)

Now you have what you need to calculate how much money you have to tell the IRS you made last year that they should tax you for.

$58,500 AGI (Remember, this is not the same as your Gross Income)

–  $15,800 family of 4 exemptions

–  $12,400 standard deduction

= $30,300 Taxable Income

That’s it! You now know what your taxable income is. You made $67,500 but for tax purposes, the federal government says, nah, let’s just worry about $30,300 of that. We’ll tax you on that portion and go from there. The first $37,200 is free!

The next step is to move onto the dreaded “tax tables”!!! Don’t worry, I’ve got you covered in Part 2, it’s not as intimidating as we might make it out to be.

Come back in a couple of days and we’ll work through Part 2 and then a nice summary that will bring it all together!



Resolution Letters

Happy New Year!

I can still say that right? It’s not too late into the New Year that we’re already looking forward to the next holiday, letting the freshness of the new year wear off as we browse through the Valentine’s Day themed chocolates in the seasonal aisle at the grocery…

Well, I hope not.

Because THIS YEAR is going to be great!

THIS YEAR we have the chance to try again!

THIS YEAR we can have accountability to make all those resolutions easier to achieve.

THIS YEAR we’re going to write ourselves a letter.

My friend and neighbor, Jane, gave me this idea while we were having lunch to celebrate her turning 30 (Happy Birthday, Jane!).   This year, I’m going to write down my resolutions.  And my thoughts on what went right and what went wrong with that CRAZY Christmas and holiday season we just survived.  And I’m also going to write down what God is teaching me right now and how He’s working on my heart.

For me, my letter is going to remind me all the ways I want to be accountable.  Having a mentor regularly speaking truth into my life.  Meeting with a friend to pray over our marriages.  Meeting with some ladies to pray over our precious children.  Exercising side-by-side and challenging our diets with another friend and neighbor.  And ALL of these ladies and I will be memorizing God’s word to strengthen these areas and make us more disciplined.  I want to decide on my word/theme for the year.  Should it be Humility? Honesty? or Self-Control?  I want to write in the letter all the reasons why I am needing these themes in my life and in my heart.

I am going to write this all down, in greater detail than the blog world needs, and I’m going to give it to Jane.  And she’s going to give me hers.  And at Thanksgiving, we’ll give them back to each other to read and remember.  And to be encouraged by.  And to be sobered by.  And to use as we prepare for 2016.

What will be in your letter?  Who are you going to choose to exchange it with?

The 1 year old

Another baby is 1. So, I guess, not a baby anymore.


Well, he still can act like a baby. 🙂

Have him turn 1 is so exciting, but a little bittersweet.  It is all going so quickly.  The growing, the milestones, the accomplishments, the days, and now the entire year.

I’m going to tag the post from his birth story so I can relive that glorious, God-ordained day, and you can too if you’re interested 🙂

Olson Emmanuel’s birth story

At least it’s not 40 degrees below 0 today. 🙂

Ms Virginia

Our sweet Virginia left this earth earlier this week

Breaking the news to Mylin was surprisingly heartbreaking as she burst into tears on daddy’s lap.  A parent can never be fully prepared for the honest emotions and faith of a child.

We are so thankful to have enjoyed the gift of her friendship for 2 years.  Her presence in our lives provided many opportunities to teach our children about service, respect, love, humility, and lastly, the importance of eternal life

She was a part of our family…

Virginia 001(Baby Sullivan)

winter 2012 011(Little Miss Mylin)037 (Sullivan’s first birthday party)038036

February and airplane 005 (Meeting baby Olson)February and airplane 004

And she will be greatly missed…

Family Mission Statement, Rules, Values, Vows, and Verse

We did it.  Finally put this all together (by God’s grace and my husband’s intentionality).

The Draper Family Mission Statement: Every day we will joyfully choose to love and serve God and our neighbors.

The Draper Family Verse:  Therefore, as God’s chosen people, holy and dearly loved, clothe yourselves with compassion, kindness, humility, gentleness and patience.  Bear with each other and forgive one another if any of you has a grievance against someone.  Forgive as the Lord forgave you.  And over all these virtues put on love, which binds them all together in perfect unity.  Let the peace of Christ rule in your hearts, since as members of one body you were called to peace.  And be thankful.  Let the message of Christ dwell among you richly as you teach and admonish one another with all wisdom through psalms, hymns, and songs from the Spirit, singing to God with the gratitude in your hearts.  And whatever you do, whether in word or deed, do it all in the name of the Lord Jesus, giving thanks to God the Father through him.

– Colossians 3:12-17

The Draper Family House Rules: 

1. Love God
2. Obey Right Away
3. Have a Happy Heart
4. Be Kind
5. Work Hard

The Draper Family Values: To intentionally practice humility, forgiveness, self-control, joy, patience, grace, service, love, and prayer with our family, friends, and the world.

The Draper Parent’s Vows: To treat our children gently, provide consistency, and be trustworthy

The Draper Kids Expectations: To honor and obey daddy and mommy, always being honest

Ok, so…

I do really love blogging.  Honest.

I just choose not to make time for it anymore right now because:

Some days I wipe 3 poopy butts all in a row (not including my own, people) and it takes a really long time.  I mean, 2 of them are cloth diapered and that whole process is more than I really want to write about.  Then the oldest one, well, we waver back and forth between “making it in time” and “skidmarks”…so, yeah.

The past 4 days I’ve been consumed with either canning peaches that were ready when I wasn’t, or familial obligations out-of-state which meant I had to pack water, diapers, packnplay, snacks, emergency snacks, suckers, extra snacks, puffs, baby food, spoons, bibs, stroller, toys, extra underwear, just-in-case clothes, pajamas, extra diapers, sunscreen, sunglasses, a dish to share, and my phone charger – all for a trip that took as long as it did to be at the actual reunion.

Oh, and the peaches that I’ve ‘finished’ canning?  I was so excited to have the last canner on that I forgot to bring it to a ‘slow boil’ and almost exploded one of the cans (read: they didn’t all seal – so WASTE OF MY TIME)

Some days, like today, I have some poop on my leg that isn’t even mine.

There are a lot of little people needing constant attention in my house.  At any given moment someone is learning how to unload the dishwasher while simultaneously fighting with their sibling about not getting to have the yellow car that they want, even though they do have a yellow car of their own.  While the younger sibling is fighting with the sibling doing a chore, he also yells at the recently mobile baby for pushing and biting on his chair which, by the decibel of his screams, informs me that he believes his life is in mortal danger.  Lastly, that baby spits up on the floor and then army crawls through it causing the older siblings to panic, but then he manages to slide through the spit up in such a way that none of us can find it on the carpet once I am alerted because the he has smooshed it into his onesie and the carpet and speaking of the baby, where’d he crawl off to?  Oh, there he is, sucking on my gardening shoe and playing with the cord from the monitor.  Did I mention that this all happened in the span of 30 seconds?  If so much takes so little time, why does it feel like I can never get anything done?

Then there’s Monday: laundry day.  Today I luckily looked at most of the shirts and caught a sticker before throwing it in and causing the entire kids laundry load to stick together from the residue of those wonderful yet cursed little joy-bringers.

And my hair?  I trimmed it, 4 months ago.  I think.  (it is time, Simba)

Some evenings, when my knight-in-shining-armor returns home to save all of us from nearly annihilating each other over whose turn it is to draw on the magnadoodle, I find myself standing in awkward positions, like a started walking and then stopped with only one foot on the ground, transfixed by what is going on in the Instagram world, and suddenly snap out of it to realize everyone is happy in the living room and 13 minutes have passed me by and I can’t even remember whose name is ‘sweeet_sally_16’ because I don’t even know any Sally’s, but man, I must have needed some detox time.

Then there are the projects.  The computer armoire, bookshelf, stool, and possibly some walls need painted.  The new curtains need hung, but I don’t have the right rings (or the right curtain rods depending on how you look at it).  There are a pile of frames without a home.  We started a compost bin but it’s not in the correct spot.  There are STILL TOMATOES GROWING IN MY GARDEN.  Joel brought me a pallet and says he has an endless supply at work (I just clicked over to Pinterest to make a board of projects for pallets that I probably will never get to, boohoo, and ended up wasting 17 minutes).  And I have this grand idea of a bedroom redo (thanks, The Nesting Place) but so far, it’s still a mess and we have no time to ‘fix’ it.

I could go on some more, I think, but I have a few laundry basket’s of clothes to fold, the boys are napping, and I really would rather be reading Unglued by Lysa TerKeurst or blogs from some of my friends that do still make time for some creative outlet

And for the 3 of you that still read this (Hi, Mom!), thank you, without your feedback, it would feel like this was a giant waste of my time 🙂


Do you know what VitaMeataVegaMin is?!

Do you love Lucy?!

If so, you won’t even need to visit the link, you’re already laughing 🙂

If NOT, however, you’ll enjoy the 30 minutes of throwback sitcom with I Love Lucy

What’s your favorite throwback episode of an old sitcom?!

(yes I know I have been absent for a month.  This is the best I could do – an old post that I wrote like a year ago and saved and just found today – hopefully it won’t be a month until I post again!)