I'm use to making about $60,000 per year delivering mail at the post office, but this year I'll make $80,000.

Question

Am I going to be in a higher tax bracket this year and how will my return be effected this year?

Answer 1

Sounds like you've worked a lot of overtime!

You probably were already in the 25% bracket, and still will be this year. They would have deducted more from your bigger paychecks, so with any luck you'll come out about the same as last year. But if you owed a lot last year, you'll probably owe even more this year.

Good luck.

Answer 2

Yes you will be in a higher tax bracket because you made more money. Talk with someone with HR Block or another tax service and see what they advise.

Answer 3

Here's some info from the www.irs.gov website.........

2006 Federal Tax Rate Schedules

Note: These tax rate schedules are provided so that you can compute your federal estimated income tax for 2006. To compute your actual income tax, please see the instructions for 2006 Form 1040, 1040A, or 1040EZ as appropriate when they are available.
Schedule X — Single
If taxable income is over-- But not over-- The tax is:
$0 $7,550 10% of the amount over $0
$7,550 $30,650 $755 plus 15% of the amount over 7,550
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200
$154,800 $336,550 $37,675.50 plus 33% of the amount over 154,800
$336,550 no limit $97,653.00 plus 35% of the amount over 336,550


Schedule Y-1 — Married Filing Jointly or Qualifying Widow(er)
If taxable income is over-- But not over-- The tax is:
$0 $15,100 10% of the amount over $0
$15,100 $61,300 $1,510.00 plus 15% of the amount over 15,100
$61,300 $123,700 $8,440.00 plus 25% of the amount over 61,300
$123,700 $188,450 $24,040.00 plus 28% of the amount over 123,700
$188,450 $336,550 $42,170.00 plus 33% of the amount over 188,450
$336,550 no limit $91,043.00 plus 35% of the amount over 336,550


Schedule Y-2 — Married Filing Separately

If taxable income is over-- But not over-- The tax is:
$0 $7,550 10% of the amount over $0
$7,550 $30,650 $755.00 plus 15% of the amount over 7,550
$30,650 $61,850 $4,220.00 plus 25% of the amount over 30,650
$61,850 $94,225 $12,020.00 plus 28% of the amount over 61,850
$94,225 $168,275 $21,085.00 plus 33% of the amount over 94,225
$168,275 no limit $45,521.50 plus 35% of the amount over 168,275


Schedule Z — Head of Household

If taxable income is over-- But not over-- The tax is:
$0 $10,750 10% of the amount over $0
$10,750 $41,050 $1,075.00 plus 15% of the amount over 10,750
$41,050 $106,000 $5,620.00 plus 25% of the amount over 41,050
$106,000 $171,650 $21,857.50 plus 28% of the amount over 106,000
$171,650 $336,550 $40,239.50 plus 33% of the amount over 171,650
$336,550 no limit $94,656.50 plus 35% of the amount over 336,550

2006 Inflation Adjustments Widen Tax Brackets, Change Tax Benefits


WASHINGTON — Personal exemptions and standard deductions will rise, tax brackets will widen and individuals will be able to make larger tax-free gifts in 2006, thanks to inflation adjustments announced today by the Internal Revenue Service.

By law, a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being modified for 2006. Key changes affecting 2006 returns, filed by most taxpayers in early 2007, include the following:

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The value of each personal and dependency exemption, available to most taxpayers, will be $3,300, up $100 from 2005.

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The new standard deduction will be $10,300 for married couples filing a joint return, $5,150 for singles and $7,550 for heads of household. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

*
Tax-bracket thresholds will increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15% bracket from the 25% bracket will be $61,300, up from $59,400 in 2005.

*
The annual gift tax exemption will be $12,000, up from $11,000 in 2005.
Revenue Procedure 2005-70, containing a complete rundown of inflation adjustments, is posted on the IRS Web site and will appear in Internal Revenue Bulletin 2005-47, dated Nov. 21, 2005.

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