If you would like to compute how much tax you need to pay, you have to start by looking at your federal tax bracket. The tax bracket will help you determine how much income tax you have to pay in a given year. This information is very important because it allows you to file federal income tax returns and pay the right taxes. To learn more about the federal tax brackets, check out the discussion below.
FAQs: What You Need To Know About Federal Tax Bracket
In this guide:
- How Are Federal Tax Brackets Determined?
- How Many Federal Tax Brackets Are There?
- What Federal Tax Bracket Status Applies To Single Filers?
- What Federal Tax Bracket Status Applies To Married Filers?
- How To Calculate Income Tax Using Federal Tax Brackets?
How Are Federal Tax Brackets Determined?
The Internal Revenue Service (IRS) determines tax rates and brackets based on annual inflation adjustments. In the past, the IRS used the Consumer Price Index as the basis for computing inflation. But with the passage of the Tax Cuts and Jobs Act, the IRS started using the Chained Consumer Price Index for adjustments in the tax brackets.
How Many Federal Tax Brackets Are There?
Taxpayers may fall under one of the seven brackets. Each bracket corresponds to the percentage of salary a taxpayer has to pay:
- 10%
- 12%
- 22%
- 24%
- 32%
- 35%
- 37%
Determining the federal tax bracket does not rely on the amount of income alone. Another consideration in computing for income tax lies on the taxpayer’s status — whether he is single or married.
What Federal Tax Bracket Status Apply To Single Filers?
A single taxpayer may fall under one of the following categories:
- Single: A taxpayer may file as “single” if he is unmarried, divorced, legally separated, or widowed. Taxpayers with dependents but are not principal guardians for more than 6 months may also file as single.
- Head of household: A taxpayer may file as “head of household” if he is unmarried, paying for more than half the total household costs, and living together with at least one dependent for at least 6 months.
- Qualifying widow or widower with dependent child: A taxpayer may file under this status if he remains unmarried yet lives with a dependent child. It may apply for up to 2 years after the death of the spouse.
What Federal Tax Brackets Apply To Married Filers?
A married taxpayer may fall under one of the following categories:
- Married filing separately: Married couples may file separately if they have separate high incomes or large itemized deductions. This filing status may result in a higher overall tax for the couple.
- Married filing jointly: Married couples may combine tax returns to get more tax benefits. For this status, the couple should take joint responsibility for incomes reported and taxes owed.
How To Calculate Income Tax Using Federal Tax Brackets?
The IRS provides the 2018 tax tables — the latest to be published by the federal government — to guide taxpayers on how much they need to pay come 2019. Under these tables, taxpayers must check the filing status under which he belongs, plus the range where his annual earning falls.
The tax rates reflected in the federal tax brackets 2018 tables are not flat rates on all incomes. Each bracket has a corresponding percentage taxpayers have to pay.
To know more about how to use the federal tax brackets in computing income tax, you may check out this video by yourwobits:
May this information about federal tax bracket help you as you prepare for the next income tax filing period. Knowing these will not only help you determine your income tax amount but will also help you avoid errors and penalties on doing your computations.
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