The amount of federal income taxes that you are required to pay is based on your filing status, your taxable income, and the IRS tax rate tables. The Income tax tables are progressive meaning the tax rates increase as taxable income increases. Each filing status has seven income ranges, or brackets, and the rates are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. As your taxable income increases, you pay at a higher rate, but only on the income that falls within a range. The 2016 tax brackets show how the tax in the IRS tax tables is calculated Tax Bracket 10% 15% 25% 2016 Tax Brackets Single Married Flling Jointly $0-$9,275 $0-$18,550 $9,276-$37,650 $18,551-$75,300 $37,651-$91,150 $75,301-$151,900 $91,151-$190,150 $151,901-$231,450 $190,151-$413,350 $231,451-$413,350 $413,351-$415,050 $413,351-$466,950 $415,051+ $466,951- 28% 33% 35% 39.6% Use the tax bracket information to fill in the missing amounts in the following tax table. Taxable Income $0-$9,275 $9,276-$37,650 $37,651-$91,150 $91,151 - $190,150 $190,151-$413,350 $413,351-$415,050 $415,051+ Single Filers Tax 10% of taxable income plus 15% of excess over $9,275 plus 25% of excess over $37,650 plus 28% of excess over $91,150 plus 33% of excess over $190,150 plus 35% of excess over $413,350 plus 39.6% of excess over $415,050 A first step to tax planning is to know your tax bracket and how close you are to the nearest tax brackets. What does it mean to be in the 25% tax bracket? Check all that apply. You pay 25% in taxes on your total taxable income. You pay 25% on your last dollar of taxable income earned. n If you are single, your income falls in the $37,651 to $91,150 range. You save 25% in taxes on your last dollar of allowable deductions. 4. Calculating taxable income For 2016, the personal exemption amount is $4,050. The 2016 standard deduction is $6,300 for unmarried taxpayers or married taxpayers filing separately, $12,600 for married taxpayers filing jointly, and $9,300 for taxpayers filing as head of household. Calculating Jeff's Taxable Income Jeff is an unmarried person filing single. Calculate Jeff's 2016 taxable income by filling in the worksheet. Enter adjustments, deductions, and exemptions as negative numbers. If your answer is zero, enter "O". Jeff will earn $90,965 in wages this year. He estimates dividend and interest income at $250. He itemizes deductions He paid mortgage interest of $7,893. . His state and local taxes were $2,560, He is entitled to one exemption. He donated $1,000 to charity. 2016 Taxable Income Gross income $ Less: Adjustments to income Adjusted gross income $ Less: Deductions Subtotal $ Less: Exemptions Taxable income $ The amount of federal income taxes that you are required to pay is based on your filing status, your taxable income, and the IRS tax rate tables. The Income tax tables are progressive meaning the tax rates increase as taxable income increases. Each filing status has seven income ranges, or brackets, and the rates are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. As your taxable income increases, you pay at a higher rate, but only on the income that falls within a range. The 2016 tax brackets show how the tax in the IRS tax tables is calculated Tax Bracket 10% 15% 25% 2016 Tax Brackets Single Married Flling Jointly $0-$9,275 $0-$18,550 $9,276-$37,650 $18,551-$75,300 $37,651-$91,150 $75,301-$151,900 $91,151-$190,150 $151,901-$231,450 $190,151-$413,350 $231,451-$413,350 $413,351-$415,050 $413,351-$466,950 $415,051+ $466,951- 28% 33% 35% 39.6% Use the tax bracket information to fill in the missing amounts in the following tax table. Taxable Income $0-$9,275 $9,276-$37,650 $37,651-$91,150 $91,151 - $190,150 $190,151-$413,350 $413,351-$415,050 $415,051+ Single Filers Tax 10% of taxable income plus 15% of excess over $9,275 plus 25% of excess over $37,650 plus 28% of excess over $91,150 plus 33% of excess over $190,150 plus 35% of excess over $413,350 plus 39.6% of excess over $415,050 A first step to tax planning is to know your tax bracket and how close you are to the nearest tax brackets. What does it mean to be in the 25% tax bracket? Check all that apply. You pay 25% in taxes on your total taxable income. You pay 25% on your last dollar of taxable income earned. n If you are single, your income falls in the $37,651 to $91,150 range. You save 25% in taxes on your last dollar of allowable deductions. 4. Calculating taxable income For 2016, the personal exemption amount is $4,050. The 2016 standard deduction is $6,300 for unmarried taxpayers or married taxpayers filing separately, $12,600 for married taxpayers filing jointly, and $9,300 for taxpayers filing as head of household. Calculating Jeff's Taxable Income Jeff is an unmarried person filing single. Calculate Jeff's 2016 taxable income by filling in the worksheet. Enter adjustments, deductions, and exemptions as negative numbers. If your answer is zero, enter "O". Jeff will earn $90,965 in wages this year. He estimates dividend and interest income at $250. He itemizes deductions He paid mortgage interest of $7,893. . His state and local taxes were $2,560, He is entitled to one exemption. He donated $1,000 to charity. 2016 Taxable Income Gross income $ Less: Adjustments to income Adjusted gross income $ Less: Deductions Subtotal $ Less: Exemptions Taxable income $