It is so important for you to qualify for the right bracket. If you are married, you have two options. You may request to file your taxes jointly or separately. According to IRS, filing jointly benefits the couples the most.
In order to make better tax calculations, you must understand the tax system of the United States. In the progressive tax system of the U.S, your tax scales with your taxable income.
Every taxpayer is responsible for the tax of the first $9,875 they make. They have to pay %10 of this amount which is $987.5. This is the lowest rating tax bracket. Let’s take a look at our chart showing the brackets for the single filer and try to understand the situation more clearly:
|Tax Rate (2020)||Single Filers|
|10%||$1 – $9,875|
|12%||$9,876 – $40,125|
|22%||$40,126 – $85,525|
|24%||$85,526 – $163,300|
|32%||163,301 – $207,350|
|%35||$207,351 – $518,400|
|%37||$518,401 or higher|
How Much I Pay?
Let’s take a look at an example to make a better understanding of the situation. If you are single filing taxpayer got $29,875 taxable income for this year, you qualify for tax rate %12 and simply calculate your %10 tax of the first 9,875 which makes 987.5.
After that, $29,875 minus $9,875 ( I’m not that good at maths so I’ve chosen easy numbers), you got $20.000 taxable income waiting to be calculated according to the %12 tax rate. %12 of $20.000 is 2.400 and you simply add your 987.5 to this. The number you will get is $3,387.5, which is the total tax amount you will pay for you $29,875 taxable income.
After you have calculated your tax for the year, it’s now time to make the right deductions for your taxes. There are two main types of tax deductions in the U.S. Itemizing and Standard Deduction are used to deduce the overall tax of the year. You can check our related post on our website to determine which deduction method suits you the most.