I know this is a very simple question, but I really don't know how to find out. I am only two years out of college, so any stocks I have bought I am still holding, and my only income is my salary. I have always used TurboTax since mine are still very simple and I trust the software to handle it.I just want to know how to figure out my tax braket so I can kind of get and idea of what plans to make in saving up for a house.Thanks
You would use the number on line 39 of the 1040 to get the exact bracket. I am assuming you are single:26,250 or less 15%26,251 to 63,550 28%63,551 to 132,600 31%132,601 to 288,350 36%288, 351 and up 39.6%That is your bracket but that is not your tax.Let's assume you earn 50Kthe first 26,250 is taxed at 15%the balance over 26,250 is taxed at 28%This will be less than if you just multiplied 50k by 28%.
Just to add a bit to what PaulEA says in #44802, the number on Line 39 of your Form 1040 is your Taxable income, not your Adjusted Gross income or income that includes tax-free municipal bond interest and stuff like that.So suppose, as PaulEA does in his example, that your gross is $50K and you are single and taking the standard deduction. Then that $50K is reduced by $4400 for the standard deduction and $2800 for a single person's exemption, making the taxable income $42,800. So it's even, a little bit, sort of, better than you might believe if you read Paul's post in total ignorance. But what he says is quite right.Tax brackets are found on Page 71 of this year's Form 1040 Instructions.
I remember being confused about and scared by tax brackets when I first started paying taxes. Looking at p. 71 of the instructions is your best starting point.The key thing to remember is that what is referred to as your tax bracket is really the uppermost rate at which you are taxed. Unless you are very wealthy, which I assume at your stage of life you are not, the bulk of your income is taxed at rates lower than your uppermost rate (tax bracket). It would be nice if someone told us this. You don't just multiply your salary by your tax bracket.Be sure you look at the right tax rate schedule: single versus married filing jointly, since I'm guessing you are married, if you're thinking about a house. Also, don't forget, when you're estimating, that you do get deductions, but that you may also have interest/divdend/capital gains in addition to your salary. If you're married, I'd guesstimate your after deduction taxable income at 10% less than your salary (or combined salaries), 5% less if you are single.Also, remember you get to deduct mortgage interest (if you itemize).
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