Irs Tax Brackets

Teachers Can't Deduct Classroom Expenses Anymore

IRS tax brackets change from year to year but the changes in store for 2011 and beyond don’t seem like good ones.  Many of the changes to the tax code will put taxpayers in a higher IRS tax bracket, meaning they’ll end up paying more money.

For example, there are some deductions and credits (which we know help to reduce your taxable income, thereby saving you money) expired in 2011.  Here are few examples:

1. state sales tax deduction: taxpayers can’t deduct state sales tax anymore
2. there was a $500 home energy tax credit but it expired…$500 will move you more than just one IRS tax bracket higher
3. AMT patch: many taxpayers who never used to have to pay the Alternative Minimum tax will now have to pay it.
4. teachers used to be able to deduct expenses related to their jobs, now they wont’ be
5. charitable contribution from an IRA: there are required distributions from IRA’s once you reach a certain age…you have to take the money out.  Some would roll that money right into a charity, bypassing their own bank accounts.  That meant it would not show up on an individual’s tax return.  again: higher IRS tax brackets 2011!

What You Need to Know in 2012

There were some changes to the IRS tax brackets in 2011 which can affect your returns this year.  For one, the alternative minimum tax (AMT) amount increased.  This is an exemption amount for 2011 which increased to keep up with inflation.  This will affect the IRS tax bracket you fall into after finishing your tax form.

The rates for the income tax are the same as they were for 2010 but the IRS tax brackets are higher.  This is how the rates are adjusted for inflation.  The brackets or tables shift slightly and if you move into a different bracket your tax amount will change.

How to Find Your IRS Tax Brackets for 2011

The best way to find out your tax bracket is to look at the IRS tax bracket tables on the government website.  Go to page 273 of the IRS publication 17 and after determining your adjusted annual income (which means deductions taken out, credits applied, etc), find your bracket to discover how much tax you will owe.

How to Understand IRS Tax Brackets

IRS Tax brackets for 2012 are easy to understand if you take a look at this simple guide.  There are basically six 2012 tax brackets. They range from 10 percent to 35 percent of your taxable income.

Here’s an Example of IRS Tax Brackets for a Single Filer in 2012 (2011 taxes)

1. 10%  on the first $8,500
2. 15% on the amount between $8,500 and $34,500
3. 25% on the amount between $34,500 and $83,600
4. 28% on the amount between $83,600 and $174,000
5. 33% on the amount between $174,000 and $379,150
6. 35% on the amount over $379,150

What’s Taxable Income?

Taxable income is not exactly your salary.  It’s wages and money you may get from retirement accounts minus different credits, exemptions and deductions.  Very rarely is anyone taxed on the full annual salary.

These are 2012 IRS Tax Brackets

These brackets will expire at the end of 2012.  Congress has to take action or the IRS Tax brackets will change and go higher.  Instead of ranging from 10% to 35%, the tax rates will range between 15% to 39.6%.