If you earn money in the United States, chances are that some of that money will be subject to federal income tax rates. 2014, like every year, brings changes to those rates. While Congress can always change the law, the Internal Revenue Service does a great job of publishing the updated federal income tax rates. 2014 numbers, current as of Dec. 10, 2013, appear below.
"Line 5" in the above chart refers to your taxable income, which is your income after any deductions and exemptions that you are entitled to claim.
Of course, not much is simple in the world of taxes. These tax rates, which are in addition to the Social Security and Medicare taxes that are withheld from your paycheck, apply to ordinary income you may earn. Long-term capital gains and dividends are taxed at different rates, an additional Medicare tax of 0.9% now applies to high earners, as does an additional 3.8% net investment income tax.
What you need to do about it
If you've got a decent salary, chances are good that some of your income will be subject to these federal income tax rates. 2014 taxes, like in most years, will need to be paid through withholding from your paycheck or through the quarterly estimated tax process.
Chances are, you don't yet know exactly what your 2014 income or tax burden will be. While you may be subject to penalties if you underpay your estimated taxes by too much, the Internal Revenue Service lets you estimate and get close. The key is to pay enough through timely estimated tax payments or payroll withholdings to be covered by a safe harbor provision. That way, you won't owe penalties if you pay your remaining 2014 income tax due by its anticipated due date of April 15, 2015.
Your reward after a career of paying taxes
After you've completed your career of working while dutifully paying your taxes, it's time to reap the rewards. Social Security plays a key role in your financial security and is one of the most common benefits available to American retirees.
After your lifetime of effort to fund your Social Security benefit, be sure to maximize the value of the payment you get from it. In our brand-new free report, "Make Social Security Work Harder For You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.