What Is Your Tax Bracket Based On?

By Alley Benton
Updated January 2, 2017
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What Is Your Tax Bracket Based On?The system of taxation is incredibly complex, which is why many people often struggle to understand what they have to pay and why. You need to know, therefore, what is your tax bracket based on. The answer to this is that it is based on two specific things.

Understanding What Is Your Tax Bracket Based On:

The first thing your tax bracket is based on is your status. As such:

1. Single

The single IRS tax bracket is for those who were widowed, legally separated, divorced, or unmarried on December 31 of the year they were filing. If they have dependents, but are not their main carer, for at least six months per year, they can also be classed as single.

2. Married Filing Separately

When people are married, they can file a joint income return, or two separate ones. Filing separately is usually better if people have large itemized deductions and/or high incomes. However, this IRS tax bracket does have some restrictions on it. Additionally, it is generally cheaper to file jointly.

3. Married Filing Jointly

In this situation, couples file a single, combined tax return. They also both have responsibility for the income that they report and the taxes that are due on that. In order to be able to file under this status, the couple must have been legally married on December 31st of the year they are filing for. Usually, this bracket has more tax benefits.

4. Head of Household

The head of household status is for those who were not married by December 31 of the year they were filing for, but pay at least 50% of the cost of maintaining their own property, as well as having a qualifying dependent (relative or child) for at least six months per year. There are special exceptions for those who have dependent parents. Generally, a head of household status is for single parents who have custody. It tends to have more benefits than the "married filing separately" or the "single" status. This includes higher standard deductions and lower tax rates.

5. Qualifying Widow(er) with Dependent Child

This status is only for widow(er)s who have a dependent child living with them, and who have not yet remarried. It can be used in the year in which the spouse died and for two years thereafter. However, it can only be accessed by those who were able to file jointly with their spouse in the year that they passed away, even if they didn't actually file a return. The Qualifying Widow(er) with Dependent Child bracket enables individual people to access the same tax rates as people who come under the "married filing jointly" bracket, which means they receive the highest deduction (if they do not itemize it), and lower tax rates. However, it is only an available status for two years.

The second element of the answer to the question "what is your tax bracket based on?" is that it depends on how much you earn. There are different percentage brackets (10%, 15%, 25% 28%, 35%, and 36.9%), and exactly which bracket you will fall in will depend on how much you earn, and which of the five statuses you are in.





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