can anybody explain how tax bracket works, is it after the AGI and how do you figure out your actual tax.?

Answer 1

First all of your income is added up, then certain adjustments are subtracted to get your AGI. Then exemptions and deductions (standard or itemized) are subtracted to get your taxable income.

Taxes are then calculated based on your taxable income, and on the various tax brackets. The first certain number of dollars is taxed at 10%, then the next certain number of dollars at 15%, then 25%, then 28%, then 33%, then 35%, up until the highest dollar of your income has been used in the calculation. The result is your tax. The number of dollars used for each bracket in the calculation depends on your filing status.

For your convenience, the IRS has pre-calculated the tax amount on taxable incomes under $100,000 so you don't have to go through the whole calculation.

There are additional calculations that might have to be done after than, such as subtracting credits and adding additional taxes like self-employment tax and AMT.

Answer 2

Tax brackets are the IRS calculations using your taxable income and the tax rates Congress has assessed based on your filing status (single, married joint, etc.) AGI is an interim step after adding all your income and making certain adjustments (such as IRA, student loan interest and qualified tuition deductions). AGI is used to calculate certain deductions (medical expenses, miscellaneous itemized deductions). It is also used to determine if exemptions are limited, whether Social Security is taxable, and whether certain credits are limited or phased out.

From AGI you subtract your exemptions and either the standard deduction or your itemized deductions as listed on Schedule A. The result is taxable income which you use to look up your tax in the tax tables.

Answer 3

The instruction booklet has tables in it with the taxes for taxable income split into brackets for single, married, head of household and married filing seperate, yaddah. After you work down to that point on your tax form you look up the taxable income amount and the column in your bracket tells you what the federal income tax is.

There is a new and simplified tax form coming into existense soon, however. It has only TWO LINES on it. The first line asks "how much did you make" and the second line says "send it all in".

Answer 4

the tax bracket is only used after your taxable income has been calculated. this means you subtract all your deductions and credits from your AGI.

using the brackets is easy. find the bracket in which yout taxable income is greater than the minmum taxable income, but less than the minimum taxable income of the next bracket. add the tax due from your bracket and all the previous tax brackets (each bracket has that calculation, so you just have to add them together). then subtract the minimum taxable income from your taxable income in your bracket. the rmeainder, you multiply by the percentage of your bracket. add that number to the tax due that you already calculated. this is your final tax due number.

Answer 5

different than the actual undeniable fact which you're no longer taxed on earnings which you in no way earned this would possibly not impression you plenty at submitting time. If she's no longer making plans on going back to artwork in 2013, that's advisable to envision your withholding status at your activity. you could accurately report your W-4 as Married + 5 allowances now. something below which will bring about too plenty tax being withheld. Any extra is refunded once you report next 12 months, yet i might plenty fairly have my money in my pocket on payday instead of lending it to the government.