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Understanding filing status on federal tax brackets

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When it comes to the federal tax brackets, you have to know that income tax is progressive. What this means is that the more money you earn, the higher the percentage of tax that you ought to pay or contribute to society. Each year, the IRS, the government agency tasked to handle the tax collection publishes the tax brackets. The brackets are determined by law and are enacted by the Congress. The IRS is the mechanism that ensures that the tax brackets are applied and are adjusted per fiscal year. The tax bracket is generally a table set each year showing the division based on taxable income of an individual depending on filing status. Each filing status will have a different payment bracket be it single, married filing either jointly or separately, as well as head of the household.

The IRS will determine your filing status on December 31 of this current year. Therefore, if you remain single in 2011 and you got married in January 2012, your filing status is still single and so you pay based on the bracket of a single tax filer. When it comes to married people, there are two options. They could either have a joint filing but they could also opt to separate their taxes. Some couples find it a lot cheaper to file jointly so a lot of married couples will do this. Of course, it varies depending on their financial situation. There is another filing status that is affected by the tax bracket. How does the head of the family fit in? This filing status will fit in a certain circumstance. One can file as the head of the household if he or she is unmarried or can be considered as unmarried by December 31 of the said year. If this qualifying individual is a parent, the parents do not necessarily have to live with the individual.

The person can qualify as unmarried or considered unmarried if the person's spouse does not live with him or her within a span of 6 months or so and that both are filing their taxes separately. The qualifying persons can be parents, children, relatives, in-laws and anyone within that range of ties with the person filing. In order to qualify, you have to show proof that you provide at least half financial support for that qualifying individual, meaning you are supporting them and they rely on your finances in order to manage their own financial needs.

Once the person has determined exactly their filing status or has been considered for the status he or she wants, the applicant can check the taxable income. Be guided that this is different from the total or gross income. There are some exceptions on those who can or cannot pay these taxes but generally, they are limited to dependents who have very minimum salaries or senior citizens or married seniors who also earn a certain amount of money. Now that you understand these aspects, you pretty much have a solid idea of what to pay for when it comes to these taxes.