Question: Do you know your tax bracket? Tax tip of the week
Knowing your tax bracket is important as you make various financial decisions throughout the year.You can use these tax rates to figure out how much tax you will pay on extra income you earn. For a taxpayer in the 25% tax bracket, extra income will be taxed at that rate until you reach the 28% bracket. Then, all income above that level will be taxed at the 28% rate. Alternatively, you can use these tax rates to figure out how much tax you will save by increasing your deductions. For example, a tax payer in the 25% tax bracket will save 25 cents in federal taxes for every dollar paid in deductible mortgage interest or charitable contributions. Here are the 2009 federal tax rates:
| Single Filing Status | |
| Taxable Income | Tax Rate |
| $0 - $8,350 | 10% |
| $8,351 - $33,950 | 15% |
| $33,951 - $82,250 | 25% |
| $82,251 - $171,550 | 28% |
| $171,551 - $372,950 | 33% |
| $372,951 and over | 35% |
| Married Filing Jointly | |
| Taxable Income | Tax Rate |
| $0 - $16,700 | 10% |
| $16,701 - $67,900 | 15% |
| $67,901 - $137,050 | 25% |
| $137,051 - $208,850 | 28% |
| $208,851 - $372,950 | 33% |
| $372,951 and over | 35% |
Capital gains are taxed at lower tax rates and are calculated separately. We will talk about capital gain taxes next week.In addition, you cannot overlook the impact of state, local, school district, social security, Medicare and the many other taxes will have on your final tax bill for the year. We will talk more about these taxes in two weeks and bring it all together. It will not be a pretty picture.As we begin to approach the end of the year, give us a call to discuss your tax situation. Also give us a call if you file as Head of Household and you want to know your federal tax bracket.In Dayton, call 937-436-3133 and in Xenia, call 937-372-3504. Or visit www.bradstreetcpas.com....until next week.