Not sure which deductions or credits you qualify for? Working with a professional tax adviser could help. Some taxpayers qualify for tax credits, which may directly reduce their tax bill. But keep in mind that itemized deductions may require detailed recordkeeping to reduce the risk of a tax audit. ![]() If that happens, they may choose to itemize their deductions. Some taxpayers may have more tax write-offs than those offered with the standard deduction. And a taxpayer’s filing status could determine which standard deduction they receive. The IRS determines the dollar amount for standard deductions. By reducing their taxable income, they could drop to a lower tax bracket. Standard deductions and itemized deductions are two ways taxpayers might be able to lower their taxable income. To find the amount of money taxpayers actually owe the IRS, they need to find their effective-or average-tax rate. Effective tax rate: Income is taxed in tiers, so a person’s entire income isn’t typically taxed at the marginal tax rate. ![]() That bracket’s tax rate will be their marginal tax rate. ![]() The bracket that a taxpayer’s highest portion of income falls into is their tax bracket. Each of these rates relates to a specific income tax bracket. But what’s the difference between the two? Taxpayers can use their marginal tax rate and their effective tax rate to determine how much they’ll owe the IRS. If you want to find the actual amount you’ll pay in taxes, you need to know the difference between your marginal tax rate and your effective tax rate. Earnings between $41,776 and their max salary of $58,000 would be taxed at the 22% rate. And they would pay a 12% tax rate on additional income until they earn $41,775. They might pay a 10% tax rate on the first $10,275 they earn in 2022. But their entire income wouldn’t be taxed at this rate. For example, a single taxpayer who made $58,000 in 2022 would be in the bracket with a 22% tax rate. Taxpayers typically have more than one tax bracket. You’ll also need to know your filing status. To find your tax bracket, you’ll need to have an estimate of your annual salary or earnings. You could also work with a professional tax adviser for more guidance. If you don’t know which status to select, taking the IRS filing status quiz could help you find the right option.
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