Estimate Your 2020 Tax Refund

This is the very first of a series of 2007 Tax recommendation sheets that I’ll be showing you over the next month or so. This one concentrates on a few of the major federal income tax key numbers. I’ll do future ones for estate preparation, retirement preparation and service planning in the not too remote future so remain tuned.

Considering that federal income taxes are such a big part of many people life or expenses, I thought that you might like a summary or referral sheet for some of the essential figures for 2007.

Many individuals think that if somebody remains in the 28% tax bracket, they pay all taxes due at the rate of 28% of taxable income. This is not correct. A couple having a gross income of $125,000 does not pay a 25% federal income tax on ALL of the taxable income … but only on everything over $63,700. The very first $15,650 is only taxed at 10%, the gross income from $15,560-$ 63,700 would be taxed at 15% and so on. The figures listed below are taxable income (after deductions and exemptions).

I’ll start with the tax brackets for the 2007 tax year.
The figures listed below show the different “steps” on how the
marginal income brackets are gradually taxed higher.

Married, Filing Jointly:

$ zero – $15,650 is taxed at 10%.
$ 15,650 – $63,700 is taxed at 15%.
$ 63,700 – $128,500 is taxed at 25%.
$ 128,500 – $195,850 is taxed at 28%.
$ 195,850 – $349,700 is taxed at 33%.
Over $349,700 is taxed at 35%.

Married, Filing Separately: .

Note: Often times it makes more sense for a couple to submit taxes separately for either tax decrease techniques or for non-tax reasons. Your tax consultant need to help you choose if there are essential factors for YOU to take benefit of this filing status.

Tax brackets for Married Filing Separately: Simply cut the above taxable figures in half for those six tax brackets.

Single: .

$ Zero – $7,825 is taxed at 10%.
$ 7,825 – $31,850 is taxed at 15%.
$ 31,850 – $77,100 is taxed at 25%.
$ 77,100 – $160,850 is taxed at 28%.
$ 160,850 – $349,700 is taxed at 33%.
Over $349,700 is taxed at 35%.

Single, Head of Household: .

$ Zero – $11,200 is taxed at 10%.
$ 11,200 – $42,650 is taxed at 15%.
$ 42,650 – $110,100 is taxed at 25%.
$ 110,100 – $178,350 is taxed at 28%.
$ 178,350 – $349,700 is taxed at 33%.
Over $349,700 is taxed at 35%.

Standard Deduction: .

Requirement Deduction is ONLY for those who do NOT detail expenditures like mortgage interest, charitable contributions, etc

. Married, Filing Jointly: $10,700.
Married, Filing Separately: $ 5,350.
Single: $ 5,350.
Single, Head of Household: $ 7,850.

Those who are blind or over age 65 can ADD $1,050 (if married) or $1,300 (if single or head of a home) to the above Standard Deductions.

Personal Exemptions: .

Personal Exemptions are set at $3,400 per permitted individual topic to Phaseouts (which are reductions in the Exemptions) based on taxable income. This is not an issue unless your gross income is at least $117,300 (depending on filing status).

Optimum taxable EARNED income topic to FICA tax: $97,500.

The Social Security and Medicare combined tax rate is 15.3% on income as much as that figure. W-2 workers pay half of the 15.3% and companies pay the other half. Self-employed pay the whole quantity.

Long-lasting Capital Gains and Qualified Dividend Rates: .
For those in the 10% and 15% Income tax brackets only: 5%.
For taxpayers in the higher tax buckets: 15%.
Capital gains on antiques (coins, stamps, and so on) 28%.

Among the crucial functions of a monetary consultant is to help reduce taxes to your legal minimum due by utilizing all proper deductions, techniques and strategies. A good tax consultant deserves their weight in gold! So go find a pro-active tax advisor, not someone who simply submits income tax return.

And now, hopefully you will have a better idea of what that person is discussing.