The facts you need
Not many people, except perhaps certified public accountants and IRS employees, like taxes. But we all have to pay them sooner or later, whether it’s through income taxes, payroll taxes or sales taxes. The positive side of taxes is that they support everything from schools and roads to social services and law enforcement.
The more you know about taxes, the less burdensome they may seem. Here are some basic facts to help you better understand our income tax system.
Income tax brackets
The United States income tax system is progressive—meaning the higher your income, the higher your tax rate. The rates are also different depending on whether you’re a single filer or married filing jointly.
Here are the basic income tax brackets for 2014. For more details on tax brackets, see the Tax Rate Tables (PDF)
Source: Internal Revenue Service (0312-1581)
Ways to reduce your tax bill
Your taxable income is usually lower than your actual income. That’s because there are certain ways to lower your tax bill through deductions, exemptions and credits, including:
- Making a contribution to your retirement account
- Making a charitable contribution
- Getting a credit for dependent care
- Qualifying for the earned income tax credit
Learn about various deductions and credits and how to calculate your tax due
Who needs to file a federal income tax return?
Not everyone is required to file a tax return. But even if your income falls below the filing requirement, you could benefit from filing a return. Every year, many low-income people forfeit tax refunds simply because they didn’t file a return. To quickly find out if your income is below the filing requirement, go to the IRS withholding calculator
Tax laws are constantly being amended. It's smart to stay on top of changes to make sure you're not only paying what you owe, but also taking advantage of all the legitimate ways to reduce your taxes. For the latest tax information, go to IRS.gov
The information on this website is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.