Understanding How To Find Your Tax Bracket
In order to make sure that you file your federal income tax return properly, and to make sure you pay the right amount of taxes you owe, you have to know the answer to the question "how to find my tax bracket". You must also learn to understand what your tax bracket actually means, which filing status is applicable to you, and which income tax rate or rates you have to pay. At the moment, six different marginal income tax brackets exist, as well as five different federal filing statuses. How much tax you have to pay to the IRS (Inland Revenue Service) depends entirely on what your filing status is, as well as on how much income you earn that has to be taxed.
Specifics on How to Find Your Tax Bracket:
The first thing you have to do is understand what the marginal income tax brackets are, which federal filing statuses exist, and what the different income tax rates are. This will allow you to properly prepare for the next filing seasons, and to develop your tax strategy.
The most important issue when you ask "how to find my tax bracket" is to understand marginal tax income brackets. Very simply put, these stand for the highest amount of tax you could possibly have to pay on the income that you earn. Six different marginal income tax brackets exist, and those can be applied to each of the five different federal filing statuses. The brackets are 10, 15, 25, 28, 33, and 35%.
A gradual tax schedule is used under the marginal tax bracket system. This means that, the more you earn each year, the more tax you will have to pay. Exactly how much income you earn that is actually taxable will help to determine which bracket or brackets you fall under. However, only the money that you earn that actually falls within that tax bracket will be taxed using that rate. What this means is that, if you earned more in 2016 than what you did in 2015, and you therefore moved up into a tax bracket, it is only the income that actually reaches that higher tax bracket that will also be taxed at that higher rate.
For instance, if you were in the 25% tax bracket, and you have moved onto the 28% tax bracket, you may accidentally believe that you have to pay 28% on all of your income. However, the only part of your income that you actually have to pay that much over is that what falls within the 28% tax bracket.
The IRS first implemented the federal income tax bracket system towards the beginning of the 20th century. They did this in order to create a progressive tax system that would ensure those on a low income would not have to pay as much tax. This, as well as a number of possible tax deductions and tax credits, have ensured that around 50% of people in this country do not actually have to pay any tax at all, thereby protecting those who earn a low income.
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