Quick: What's your Income Tax Brackets? Even if you know it, the concept is pretty perplexing. And worse, many us taxpayers do not appreciate the consequence, or in some situations, the lack of importance of Income Tax Brackets. overemphasize taxes, yet on the other hand they play down taxes. The Tax Experts at IRSmedic help remove the misunderstanding with powerful analysis.
But first some quick history. Each major society were destroyed by one thing: High taxes. And the founders of this Country were well informed of this reality. Thus, they put language that forbade the federal government from taxing income. However, a political bloc, the progressives came into being around the turn of the century, thought it would be better to tax its citizens based on income to both raise revenue and impose Income Tax Brackets that supposedly would make life more fair.
With the Progressive's sixteenth Amendment in hand, Congress was now able to fire-up up the IRS with unforseen powers. Progressives' claims to use the new income tax to just tax the rich were quickly ignored.
Not quite a hundred years has passed since the Revenue Act of 1913 and we have observed Income Tax Brackets go up and fall. Though, one thing is true: the tacit pledge of only demanding a tax upon the rich has been promptly abandoned. There are frequent other tax on income the IRS extracts, not just income taxes and those are assessed on all wage earners.
The IRS also extracts employment and self-employment taxes which nearly affect all income earners. Half of what the IRS collects is employment taxes. Income Tax Brackets are completely silent to these employment and self employment taxes.
For individual us taxpayers, the present tax bracket rates are 10, 15, 25, 28, 33 and 35%. The tax bracket one falls into is dependent on filing status and as well as income earnings.
Yet, these tax bracket rates will not be relevant to some types on income earnings. And as an additional bonus, the employment and self employment taxes referred to above aren't imposed either. The kinds of taxes that obtain preferential treatment are long term capital gains, dividends and passive income from real estate investments.
Yet these Income Tax Brackets may well have no basis on what is paid. For many higher-income wage earners the Alternative Minimum tax will actually assess a higher tax. And that's what will have to be paid --- the Alternative Minmum Tax rate. The reason the Alternative Minimum Tax is larger is the IRS won't allow certain deductions.
Taxpayers should pay more awareness to their effective tax rate, rather than the tax rate the Income Tax Brackets say they will be paying.As there can be vast variances which can lead to vast troubles.
But first some quick history. Each major society were destroyed by one thing: High taxes. And the founders of this Country were well informed of this reality. Thus, they put language that forbade the federal government from taxing income. However, a political bloc, the progressives came into being around the turn of the century, thought it would be better to tax its citizens based on income to both raise revenue and impose Income Tax Brackets that supposedly would make life more fair.
With the Progressive's sixteenth Amendment in hand, Congress was now able to fire-up up the IRS with unforseen powers. Progressives' claims to use the new income tax to just tax the rich were quickly ignored.
Not quite a hundred years has passed since the Revenue Act of 1913 and we have observed Income Tax Brackets go up and fall. Though, one thing is true: the tacit pledge of only demanding a tax upon the rich has been promptly abandoned. There are frequent other tax on income the IRS extracts, not just income taxes and those are assessed on all wage earners.
The IRS also extracts employment and self-employment taxes which nearly affect all income earners. Half of what the IRS collects is employment taxes. Income Tax Brackets are completely silent to these employment and self employment taxes.
For individual us taxpayers, the present tax bracket rates are 10, 15, 25, 28, 33 and 35%. The tax bracket one falls into is dependent on filing status and as well as income earnings.
Yet, these tax bracket rates will not be relevant to some types on income earnings. And as an additional bonus, the employment and self employment taxes referred to above aren't imposed either. The kinds of taxes that obtain preferential treatment are long term capital gains, dividends and passive income from real estate investments.
Yet these Income Tax Brackets may well have no basis on what is paid. For many higher-income wage earners the Alternative Minimum tax will actually assess a higher tax. And that's what will have to be paid --- the Alternative Minmum Tax rate. The reason the Alternative Minimum Tax is larger is the IRS won't allow certain deductions.
Taxpayers should pay more awareness to their effective tax rate, rather than the tax rate the Income Tax Brackets say they will be paying.As there can be vast variances which can lead to vast troubles.