Don't look now, but you have less than a month to file your 2013 taxes. If you dread this time of year because it seems as if taxes get more and more complicated, this time around you'd be correct, with the addition of another tax bracket.
Most people either pay a preparer or use some sort of software to file their taxes, since the tax code is so complex -- and it's likely to stay that way, as preparers have spent millions of dollars lobbying the government to keep it complex. Simplified tax tables, if we do get any relief, are still at least two years away. The good news is that your tax rate significantly changed only if you made more than $400,000.
So what do you need to look for on your taxes this year? Well, the big difference between 2012 and 2013 is that the American Taxpayer Relief Act increased the payroll tax from 4.2% to 6.2% and raised taxes for those earning above $400,000 a year. If you make less than that, your income-tax rates and capital-gains rate are unchanged from 2012.
Here are the seven tax brackets for tax year 2013:
|
Tax Rate |
Single |
Married Filing Jointly, or Qualifying Widow |
Married filing separately |
Head of Household |
|---|---|---|---|---|
|
10% |
< $8,925 |
< $17,850 |
< $8,925 |
< $12,750 |
|
15% |
$8,926 to $36,250 |
$17,851 to $72,500 |
$8,926 to $36,250 |
$12,751 to $48,600 |
|
25% |
$36,251 to $87,850 |
$72,501 to $146,400 |
$36,251 to $73,200 |
$48,601 to $125,450 |
|
28% |
$87,851 to $183,250 |
$146,401 to $223,050 |
$73,201 to $111,525 |
$125,451 to $203,150 |
|
33% |
$183,251 to $398,350 |
$223,051 to $398,350 |
$111,526 to $199,175 |
$203,151 to $398,350 |
|
35% |
$398,351 to $400,000 |
$398,351 to $450,000 |
$199,176 to $225,000 |
$398,351 to $425,000 |
|
39.6% |
> $400,001 |
> $450,001 |
> $225,001 |
> $425,001 |
Source: IRS.
Note that these are marginal tax rates, or the rate you pay on each additional dollar of income. For example, assuming no deductions, if you earned $8,926 in 2013, that's $1 above the 10% tax bracket, so your rate would be 10% on the first $8,925 of income and 15% on the next $1 of income. Your rate would not be 15% on the entire $8,926.
If you want a rough estimate of what you will owe, you can use the IRS' tax tables. For those earning less than $100,000, you can find the full tables on the IRS' website. If your earnings are above $100,000, the IRS requires you to do some calculations on your own.
