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Tax Bracket Questions

What is a Tax Bracket?

A Tax Bracket is different groups that are determined at which tax rates change in a progressive tax system. There are cutoff values for taxable income; the taxable income will be taxed at a higher rate past a certain point. If a person’s an annual income goes past the cutoff point, that person is taxed due to the next tax bracket.

According to tax brackets would an individual need to change their W2 form if there are individuals living with them that do not work, and they are considered the head of household? Would this drop the individual tax bracket percentage?

If at least one of the individuals is a qualifying person for “Head of Household”, then one of the people could use that status.

Only certain types of relatives can be qualifying persons for Head of Household as follows:
  • Child, step child, adopted child, foster child, brother or sister, or a descendant of one of these whom you can claim as a dependent under the qualifying children rules;
  • Child, step child, adopted child, foster child, brother or sister, or a descendant of one of these whom you would be able to claim as a dependent under the qualifying children rules but choose not to claim as a dependent because you released the dependent's exemption to the noncustodial parent;
  • Mother or father who can be claimed as a dependent under the qualifying relative rules;
  • Brother, sister, grandparent, niece, or nephew whom you can claim as a dependent under the qualifying relative rules.

If a person is in the 36% tax bracket; does that mean that the entire income is taxed at 36% or is it a graduated system and only that part above a certain level is taxed at 36% ?

That will be the only part that is above a certain level is taxed at 36%; if the person’s taxable income is decreased by a dollar then the tax saving will be only be $.36. Although, if the person’s income is gained by one dollar then the tax liability will be $.36; Tax brackets apply to taxable income. The tax brackets can vary depending on the way a person files the taxes.

What tax bracket would a couple be in if they are jointly filing with a $167,000 income in California? What percentages of the earnings are supposed to be paid for the State and Federal levels?

A person’s tax bracket depends on the tax income; it has nothing to do with a person’s total income that is earned. The person will have to factor in the adjustments, deductions and exemptions before the person will know what the tax bracket. The couple may be in the highest bracket for CA, 9.3%.

Is there a 50% tax bracket for individuals earning over 1 million dollars?

There is not a specific tax bracket for that type of income. No there is no currently such bracket for income taxes. The highest tax bracket is 35%. Although, there is something called the inheritance tax on estate that is worth over $2,000,000. The highest tax bracket on it is 47%.

Hard working people are filing for income taxes and want to know what tax bracket that they fall in. Often individuals and couples have questions like what is the Federal Tax Bracket, what is my tax bracket, and questions like what is the retirement tax bracket. Experts can assist with questions that involve income taxes and tax bracket questions that people may have. It is important to ask questions about this topic to give a better understanding.
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