What Income Tax Bracket Are You In?
Understanding which tax bracket you fall into is helpful as you prepare to complete your tax return each year. A tax bracket is defined as a range of incomes that are taxed at a certain rate. The government charges more taxes to those who earn more (and are in higher tax brackets). So, as your income increases, your tax bracket increases and you are asked to pay more each year in income taxes. This system is based on the assumption that the more money you make, the more of the tax burden you can endure.
What information do you need to determine your tax bracket?
If you would like to figure out approximately which tax bracket you fall in, you will need one very important piece of information – your taxable income. This is your adjusted gross income minus your standard or itemized deductions. Your tax bracket is based on your taxable income. You can consult the IRS website to determine your tax bracket based on your taxable income. One important thing to note is that your income is taxed as it progresses through each tax bracket. So, if your taxable income is $50,000 and that puts you in the third (25%) tax bracket, a portion of your tax would be calculated in the first tax bracket, a portion in the 2nd tax bracket and the remaining amount (your “last dollar” amount) would be taxed at the 25% rate for the 3rd tax bracket.
Helping you keep track of your tax bracket
Tax brackets can change each year so it is important that you consult the IRS website for current bracket information. In 2013, there are 7 different tax brackets with tax rates of 10, 15, 25, 28, 33, 35, 39.6%. If you are concerned that your tax bracket may be too high, one way to decrease your taxable income is to increase your claims for appropriate deductions. Thinking about how best to itemize your deductions and plan ahead for your tax return, consider partnering with a tax firm with experience. Success Tax Relief has been working with clients to solve all types of tax problems for more than thirty years and developed a strong record of working directly with the IRS.
Success Tax Relief: Proactive management of your taxes
Success Tax Relief will start by reviewing your previous tax records, your income, and your deductions to get a snapshot of your taxes. We will suggest areas that if you could alter slightly will make a real difference in your annual return. We can also give you more information about how your tax bracket is determined and help you calculate exactly how much to expect to pay. Developing a relationship with a tax firm has many additional benefits as well. We can help you look ahead, request extensions when needed and, of course, handle any and all tax problems that may come up.
Call Success Tax Relief today at 1-877-958-6638 for a free consultation and to get all of your tax questions answered!