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
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