Federal Tax brackets are misunderstood. Did you know that they have little to do with how much you will pay — especially at the higher-end brackets? Did you know that tax brackets will never tell you how much you will pay in other taxes like social security and medicare? Also hidden, is what your employer pays in taxes or what you will pay as self-employment tax if you are self-employed. It is easy to estimate your tax liability incorrectly.
With these warnings, here are the four different kinds of tax rate schedules of income tax brackets.
Tax-Bracket-Married-Joint (or qualifying widower)
Again, these tax brackets are essentially useless in determining an accurate estimate of what your tax liability will be. These federal tax brackets are only a rough guide, in the loosest sense of the word. Even the IRS gives this same warning. The only way to calculate your tax liability is by completing your personal 1040, with all schedules — especially schedule SE for those who are self-employed, or Alternative Minimum Tax (AMT) for higher income earners. It is very easy, especially for recent arrivals to the higher tax brackets to get withholding and estimated payments wrong.
We understand that few taxpayers truly understand taxes — even those who have impressive credentials, or feel they should know better. Trust us, tax problems happen to a surprising array of people (we've had attorneys, and even IRS employees as clients!). That’s why we always look to educate, not berate our clients. So…if you are unpleasantly surprised by line 70 of your 1040 tax return, “Amount you owe,” and are wondering what your best course of action is, contact us for a confidential consultation to advise you on the best way out of this problem.
IRSMedic.com is the website for Parent & Parent LLP, a tax law firm of IRS resolution attorneys, Certified Public Accountants, and Enrolled Agents who want to be the team that permanently resolves your tax problem where others have failed. We have developed a proven system of solving any tax problem in the least amount of time, for the smallest amount of headache. Our firm is located in Connecticut, but we serve US taxpayers worldwide for IRS, US Tax Court and state revenue agency issues.