FilingStatusClassifications
•Single
•Marriedfilingjointly
•Marriedfilingseparately
•Headofhousehold
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Understanding Income Taxes: Filing Status, Cost of Living Adjustments, Payments, & Social , Slides of Management Fundamentals
An overview of various aspects of income taxes, including filing status classifications, cost of living adjustments in tax brackets, methods of paying taxes, social security and fica taxes, state and local income taxes, and calculating taxes. It also covers sources of taxable income.
Typology: Slides
2012/2013
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Filing
Status
Classifications
Single
Married
filing
jointly
Married
filing
separately
Head
of
household
Cost of Living Increases in the Tax Brackets
The tax brackets change annually to insure that no one pays more income tax just because earnings increased with inflation. - Bracket creep
a tax liability increase caused by inflation.
Example
the income minimum for the
tax bracket for joint filers increased from
to $43, in
Social
Security
or
FICA
Social Security
a mandatory insurance program administered by the federal government that provides support in the event of death, disability, health problems, or retirement.
Tax rate of
of gross salary
Social Security cap, adjusted annually for inflation, was
in
Income over this amount is not taxed.
Social
Security
or
FICA
(cont’d)
Medicare
a
health
care
insurance
program
for
elderly
and
disabled.
Tax
rate
of
of
gross
salary,
with
no
annual
cap.
Total
FICA
tax
rate
Social
Security
Medicare).
You
are
only
responsible
for
half
of
the
tax
unless
you’re
self
employed.
Other
Non
Income
Based
Taxes
That
You
Face
Excise
“sin
taxes”
and
state
sales
taxes
imposed
when
goods
are
purchased
Real
estate
and
property
taxes
imposed
annually
or
semi
annually
on
assets
owned
Gift
and
estate
taxes
imposed
when
assets
are
transferred
from
one
owner
to
another
Calculating
Your
Taxes
Who has to file an income tax return?
Determining gross or total income - Calculating adjusted gross income
(AGI)
Subtracting deductions
Claiming your exemptions - Calculating your base income tax - Determining your credits - Determining your final tax liability
Sources
of
Taxable
Income
Wages, salaries, and tips - Capital gains, dividends, and interest - Alimony - Pension funds and IRA distributions - Business and farm income - Rental and royalty income - Social Security and unemployment benefits