Michael1942's Blog

This election season has brought several tax reform speeches from candidates but many of outside the accounting world understand what they are talking about and some omissions of details cause the raising of hackles and railing against  taxes. Just remember that without taxes this country or any others could not function. If the government were to access each of us our fair share for the amount needed to run the country, would it be more or less than the existing taxing system? We would be better served understanding the tax brackets and then looking at anything that “reform” the tax code so that it works better and  pressuring our Congress to make rational (reasonable) reforms. These reforms should consider the many European countries whose taxing system allows for free (mostly) education K-through college. If this works in smaller countries (by size and population) then why can’t the USA, being one of (if not the) the wealthiest countries in the world? The consideration is that we have people speaking for us (and we allow it) but using buzzwords and sound bites that will not stand close scrutiny. The information below is not a complete explanation but it will allow you to see what the taxing standards are.These figires provided by Credit.Com.

How Many Tax Brackets Are There?

How Tax Brackets Work

How much you pay in federal income taxes depends on how much you make, whether you are married or single and whether you are head of household.

There are seven major tax brackets – 10%, 15%, 25%, 28%, 33% 35% and 39.6% — and there are separate sets of brackets for single tax filers, married tax filers who file jointly, married tax filers who file separately and tax filers who are single and file as head of household.

You will find tax brackets for 2014 and 2015 below.

Let’s say you are single and had $30,000 of taxable income in 2014, after your deductions.

For the first $9,075, you are in the 10% tax bracket and would pay $907.50, a 10% tax on this portion of your taxable income.

For the remainder of your taxable income, $20,925, you would fall into the 15% tax bracket ($9,076 to $36,900)
 and you would pay $3,138.75, a 15% tax on this portion of your taxable income.

This holds true for the other tax brackets as well. So you only pay the higher tax rates on the portion of your income that falls into that particular tax bracket. And you pay the lower rates associated with the lower tax brackets for those sections of your taxable income.

Am I the Head of Household?

To file as head of household, you must meet certain requirements.

You must be single on the last day of 2014

You have to have paid more than half the cost of keeping up a home for a year.

A qualifying person, such as a child, stepchild or foster child, has lived with you in your home for more than half a year.

If you are divorced by the last day of the year, you are considered unmarried for the whole year and if you had a child live with you for more than half a year, you may be able to file your taxes as head of household.

If you do, your tax rate will usually be lower than the tax rate for a single filer or if you are married and filing separately.

I’m Married. Should We File Jointly?

When you file a joint tax return with your spouse, you report your combined income, deductions and exemptions. Both you and your spouse are held responsible for the payment of the taxes that you owe.

So with a joint return, if your spouse fails to pay his or her share of the taxes due, you may be required to.

If you don’t wish to be held responsible for any taxes due if a spouse fails to pay, you may wish to file your taxes separately. For tax year 2014, there are seven major tax brackets –10%, 15%, 25%, 28%, 33%, 35% and 39.6% — and how much you pay in taxes depends on your income and whether you are single, married or the head of your own household.

Which Tax Bracket Are You In?

For single filers, the 2014 tax brackets are:

10% – up to $9,075

15% – $9,075 to $36,900

25% – $36,901 to $89,350

28% – $89,351 to $186,350

33% – $186,351 to $405,100

35% – $405,101 to $406,750

39.6% – more than $406,751

For married couples who file their taxes jointly, the 2014 tax brackets are:

10% – up to $18,150

15% – $18,151 to $73,800

25% – $73,801 to $148,850

28% – $148,851 to $226,850

33% – $226,851 to $405,100

35% – $405,101 to $457,600

39.6% – more than $457,601

For married couples who choose to file their taxes separately, the 2014 tax brackets are:

10% – up to $9,075

15% – $9,076 to $36,900

25% – $36,901 to $74,425

28% – $74,426 to $113,425

33% – $113,426 to $202,550

35% – $202,551 to $228,800

39.6% – more than $228,801

If you were single and the head of your household at the end of the year, your 2014 tax brackets are:

10% – up to $12,950

15% – $12,951 to $49,400

25% – $49,401 to $127,550

28% – $127,551 to $206,600

33% – $206,601 to $405,100

35% – $405,101 to $432,200

39.6% – more than $432,201

The Tax Year 2015 Brackets

For single filers, the 2015 tax brackets are:

10% – up to $9,2255

15% – $9,226 to $37,450

25% – $37,451 to $90,750

28% – $90,751 to $189,300

33% – $189,301 to $411,500

35% – $411,501 to $413,200

39.6% – more than $413,201

For married couples who file their taxes jointly, the 2015 tax brackets are:

10% – up to $18,450

15% – $18,451 to $74,900

25% – $74,901 to $151,200

28% – $151,201 to $230,450

33% – $230,451 to $411,500

35% – $411,501 to $464,850

39.6% – more than $464,851

For married couples who choose to file their taxes separately, the 2015 tax brackets are:

10% – up to $9,225

15% – $9,226 to $37,450

25% – $37,451 to $75,600

28% – $75,601 to $115,225

33% – $115,226 to $205,750

35% – $205,751 to $232,425

39.6% – more than $232,426

If you were single and the head of your household at the end of the year, your 2015 tax brackets are:

10% – up to $13,150

15% – $13,151 to $50,200

25% – $50,201 to $129,600

28% – $129,601 to $209,850

33% – $209,851 to $411,500

35% – $411,501 to $439,000

39.6% – more than $439,001