The IRS is the sector in US to get income tax of every single person. 2018- 2019 federal income tax brackets and new tax rates, it is the largest source of revenue for the US. It is about all the resident of US gives tax. It is compulsory to them to file a tax return with IRS each year. These taxes are in the form of payroll taxes. The income tax rates have range from 10% to 39.6%. The current government have suggested to low down the rates to 37%. It will low down the burden on taxpayers. It will helpful for them to request for exemptions, deductions and credits. Below is a close look on the rates of IRS. It will help to understand the tax rules.
2018- 2019 Federal Income Tax Brackets and New Tax Rates
Calculating Income Tax Rate
The income tax is liberal in US. It means that higher the tax for higher income. This is marginal tax rates which do not apply to total income. It applies to the income which is in particular range. The second name of these ranges is federal income tax brackets. The tax rate applies which is in that bracket to the taxpayer. The below list is the federal income tax brackets with tax rate.
|$0 – $9,325||10.00%|
|$9,325 – $37,950||15.00%|
|$37,950 – $91,900||25.00%|
|$91,900 – $191,650||28.00%|
|$191,650 – $416,700||33.00%|
|$416,700 – $418,400||35.00%|
These brackets are varying according to taxpayer file. It may be single, married or the head of house. These are on the basis of filing statuses. The married person can apply together or separately. It is better to apply separately. It will decrease the tax rate. If any taxpayer has income $50,000 then he will pay 25% tax of his income. Actually the taxpayer will not pay the tax on his whole income. It divides the income according to federal income tax brackets and rates. Firstly the income will divide in first bracket then rest of his income will goes to next bracket. Then the remaining will get the third bracket respectively. This is the method due to marginal tax rates.
Calculating Taxable Income Using Exemptions and Deductions
The tax rates also apply to taxable income as well. It is different than the gross income. It is always less than gross income. To make it taxable income it is going to adjust it to adjusted gross income. It includes student loan payments, moving expenses and health care expenses. If the taxpayer adjusts his gross income then he can subtract exemptions and deductions to make it taxable. The exemption was equal to four thousand and fifty dollars in 2017.
The taxpayer can request for exemptions. The children and spouse of taxpayer can also request for it. In this scenario the taxpayer can subtract the amount from taxable income.
There are many taxpayers who request for standard deduction. It varies because of filing status. Here below is the status of deduction.
|Filing Status||Standard Deduction Amount|
|Married, Filing Jointly||$12,700|
|Married, Filing Separately||$6,350|
|Head of Household||$9,350|
A few taxpayers may select to itemize their deductions. It means that certain expenses will subtract. The common itemized deductions are as follows.
- Deduction for state and local taxes.
- Deduction for mortgage interest
- Deduction for charity
- Deduction for health care expenses which are up to 10% of AGI.
It is going to keep it mind that most of the taxpayers do not itemize their deductions. The increase in standard deduction as compare to itemized deductions then standard deduction will go on.
How to Calculate Federal Tax Credits
There are some unlike adjustments which apply to gross income. It will give tax credit which means the amount of tax that the taxpayer owe. It applies on certain conditions. Some credits are refundable which means that the taxpayer can receive payment for them. Even he does not owe any income tax. There are some common taxes credits are as follows.
- The Earned Income Tax Credit: It is a refundable credit. If the taxpayer has three or more kids than the credit will six thousand one hundred and forty three dollars and less than for one or no kids.
- The Child and Dependent Care Credit: it is a nonrefundable credit. It is up to kid expenses.
- The Adoption Credit: it is a nonrefundable credit. It equals to the expenses of an adopted kid.
- The American Opportunity Credit: It is a partially refundable credit. It covers the tuition fees and course materials expenses of higher studies.
There are some other credits as well. It includes foreign taxes and health insurance.
Calculating Your Tax Refund
If the amount of the taxes is less than the amount the taxpayer he owes then he will get a refund. It is the common cause that people get a tax refund. If the taxpayer does not pay any tax and fit for tax credit then he will get a refund equal to the credits.
Paying Your Taxes
It is feasible to pay the taxes by credit card. This is the easiest way and gets credit rewards and points as well. There are three payment methods to collect tax payments.by credit card. All the methods charge fees for credit card payments.
State and Local Income Taxes
The taxes are different for different states. It also varies in cities and countries as well. All the states and cities have different rules of income tax. If the taxpayer has any interest to pay state tax then he will file for state tax.
How the Trump Tax Plan Will Affect Your Taxes?
The head of US has decided to decrease the tax rate. He has planned to maintain the seven federal income tax brackets but lowers the top rate. He has willed to double the standard deduction for single ones and also for couples. Taxpayers are also able to deduct state and local property tax. He also likes to reduce the corporate tax up to 21%. Here below is the new proposal of income federal income tax brackets.
Source website for 2018-2019 Federal Income Tax Brackets and New Tax Rates
Hi, I'm Abdul Ghaffar. A professional Bookkeeper and new into the Blogging. I am QuickBooks Online Pro Advisor. I have started blogging to help small business Owners, Bookkeepers, and Accounting to minimize Bookkeeping maximize the Profits. I have my own Accounting Services Tax King Inc. My Team working with QuickBooks online Clients through out the USA. My goal is to provide small business owners, accountants, and bookkeepers with world-class content for improving their financial and business lives and to make a lasting and meaningful impact in the small business world.