income tax Archives - Faithful with a Few

By this time, most people should have received all of the necessary tax forms in order to prepare their income tax return. Many people have questions about various deductions, credits, and exemptions. However, there are a large number of people who never get that far, because they have one major question: Do I need to file an income tax return?

Well, the IRS has provided a couple of resources to help you understand if you need to prepare a tax return.

What Determines If I Need To File An Income Tax Return?

According to the IRS, “you must file a federal income tax return if your income is above a certain level”. How do you know what that “certain” level is? Well, that varies depending on a few factors:

Your Filing Status
Your Age at the End of the Tax Year
The Type of Income You Receive

Is There An Easy Way To Determine If I Need To File An Income Tax Return?

There are two main methods that the IRS lists that you can use to figure out if you must prepare a return:

Check the Individuals section of the IRS website or consult the instructions for Form 1040 (opens PDF), 1040A (opens PDF), or 1040EZ (opens PDF) for specific details that may help you determine if you need to file a tax return with the IRS this year.

Use the Interactive Tax Assistant available on the IRS website to determine if you need to file. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

If you have determined that you have to prepare a return, then be sure to contact us to set up an appointment for tax preparation. If you decide to file your own taxes, we recommend using TurboTax to do so. Also, keep in mind that there are many benefits when you file a tax return, even when you are not required to do so.

Be sure you are aware of the tax filing delay, as well as the fact that the tax filing deadline has been extended this year. Also, you should know the IRA Contribution Limits, 401k Contribution Limits, and the Income Tax Rates for 2011!

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The Income Tax Rates for 2011 haven’t changed much from 2010. This is because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law on December 17, 2010 (Click here if you would like to read the full bill). This Act included a last minute extension of the Bush-era tax cuts, which in turn confounded most projections regarding the federal tax rates for 2011.

If you recall, this is the reason for the income tax filing delay, but not the reason for the extension of the tax deadline.

First I will give you the income tax rates for 2011 in the form of a basic chart with the dollar range and the marginal tax rate. Then I will list the income tax rates using the form of the IRS rate table showing exactly how much you will pay in taxes.

Single: Income Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$8,500	10%
$8,500	$34,500	15%
$34,500	$83,600	25%
$83,600	$174,400	28%
$174,400	$379,150	33%
$379,150	Unlimited	35%

Below is the actual dollar amount that “single” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$8,500	10% of the taxable income
$8,500	$34,500	$850 plus 15% of the excess over $8,500
$34,500	$83,600	$4,750 plus 25% of the excess over $34,500
$83,600	$174,400	$17,025 plus 28% of the excess over $83,600
$174,400	$379,150	$42,449 plus 33% of the excess over $174,400
$379,150	Unlimited	$110,016.50 plus 35% of the excess over $379,150

Married Filing Jointly: Income Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$17,000	10%
$17,000	$69,000	15%
$69,000	$139,350	25%
$139,350	$212,300	28%
$212,300	$379,150	33%
$379,150	Unlimited	35%

Below is the actual dollar amount that “married filing jointly” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$17,000	10% of the taxable income
$17,000	$69,000	$1,700 plus 15% of the excess over $17,000
$69,000	$139,350	$9,500 plus 25% of the excess over $69,000
$139,350	$212,300	$27,087.50 plus 28% of the excess over $139,350
$212,300	$379,150	$47,513.50 plus 33% of the excess over $212,300
$379,150	Unlimited	$102,574 plus 35% of the excess over $379,150

Head of Household: Federal Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$12,150	10%
$12,150	$46,250	15%
$46,250	$119,400	25%
$119,400	$193,350	28%
$193,350	$379,150	33%
$379,150	Unlimited	35%

Below is the actual dollar amount that “head of household” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$17,000	10% of the taxable income
$17,000	$69,000	$1,215 plus 15% of the excess over $12,150
$69,000	$139,350	$6,330 plus 25% of the excess over $46,250
$139,350	$212,300	$24,617.50 plus 28% of the excess over $119,400
$212,300	$379,150	$45,323.50 plus 33% of the excess over $193,350
$379,150	Unlimited	$106,637.50 plus 35% of the excess over $379,150

Married Filing Separately: Federal Tax Rates

Taxable Income is	Taxable Income is
Over	But Not Over	Tax Rate
$0	$8,500	10%
$8,500	$34,500	15%
$34,500	$69,675	25%
$69,675	$106,150	28%
$106,150	$189,575	33%
$189,575	Unlimited	35%

Below is the actual dollar amount that “married filing separately” taxpayers will owe:

If Taxable Income Is Over	But Not Over	The Tax Is:
$0	$8,500	10% of the taxable income
$8,500	$34,500	$850 plus 15% of the excess over $8,500
$34,500	$83,600	$4,750 plus 25% of the excess over $34,500
$83,600	$174,400	$13,543.75 plus 28% of the excess over $69,675
$174,400	$379,150	$23,756.75 plus 33% of the excess over $106,150
$379,150	Unlimited	$51,287 plus 35% of the excess over $189,575

A Quick Note About Marginal Tax Rates:

As you can see from the tables above, a marginal tax system works very differently than a flat tax system. If the United States used federal tax rates based on a flat tax, then once you crossed over into a new tax bracket, all of your income would be taxed at that higher rate. For example, once a single taxpayer earned over $34,500 in taxable income, then they would pay 25% on all of their income.

However, due to our marginal tax system, this single taxpayer only has to pay 25% on taxable income over $34,500. You must keep this in mind when you evaluate whether a raise, bonus, or investment is as good or bad as it seems (especially when compared to a flat tax system).

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