First of all, one of the things people struggle with most when it comes to preparing their taxes is estimating how much tax they will owe based on their tax bracket. It’s no wonder, either — there are about 7 different tax brackets per filing status, and they can get confusing pretty quickly. So we’ve put together a beginner’s guide to tax brackets to help you know where you fit in.
What is a Tax Bracket?
Fruthermore, a tax bracket determines how much you owe based on your annual income. Each bracket includes a different salary range that will be taxed at its own rate. The more you earn, the more you will be taxed. And if your earnings increase beyond the salary range of your tax bracket, you will be taxed at a higher rate.
The salary range for each tax bracket changes depending on your filing status. Where do you fall?
Individual filers have the most expensive filing status for low earners because the cutoff for the lowest tax bracket is so low. Here’s a breakdown of tax brackets for individual filers:
Bonus: Pros and Cons of DIY Taxes
Married Individuals Filing Separately
Married Individuals who choose to file separately face the highest tax brackets of all. The 10% and 15% brackets match those for single filers, but the 25% bracket cuts off about $20K earlier than it does for single filers.
Here’s a breakdown of tax brackets for married individuals filing separately:
Married Individuals Filing Jointly
Married individuals filing jointly get the most leeway when it comes to tax brackets. This filing status has the highest cutoffs for each tax rate, which means that you can make more without your tax rate going up.
Here’s a breakdown of tax brackets for married individuals filing jointly:
Heads of Households
Tax brackets for people who file as heads of households fall somewhere between single filers and married individuals — salary caps for each rate aren’t as high as for married individuals filing jointly, but are still significantly higher than those for individual filers.
Here’s a breakdown of tax brackets for people filing as heads of households:
In conclusion, do you need help determining your tax bracket or filing status? Our team of professionals at Hacker Accounting will cover you. Give us a call today at 602-375-5251 to make an appointment.
*Bracket information via Forbes.