The 2011 tax season is long gone, and the majority of Americans have already filed their information to the IRS. Although this is out of the way, you should start preparing yourself for the 2012 tax season. Knowing which bracket you fall under determines your 2012 tax rates. The rates are the same for both single and married taxpayers, but the incomes of taxation within the brackets are different. There are also differences in deductions that account for recent inflation. As you prepare for 2012 taxes, you should bear in mind that there could also be significant changes around the corner for 2013.
Single Tax Brackets
The IRS has set the tax brackets for single filers based on their income level as follows:
As a single taxpayer, it is worth looking into your average income and then seeing where it falls for the current tax year. If you find that your income is on the cusp between two different brackets, then it may be worth looking into how you can increase or decrease your wages to make up for the difference.
Married and Filing Jointly or Separately
The amount of taxes you have to pay can differ based on your marriage status. There are slight differences in the mode that you are taxed because there are at least twice as many expenses between two people, as opposed to paying the cost of living for just one person. The brackets are different if you are married but file separately from your spouse, and you lose out on any credits that you might incur if you file a joint return. It is generally more beneficial to file a joint return.
The tax brackets for married joint and separate filers are as follows:
|Tax Bracket||Filing Jointly||Filing Separately|
|35%||Above $388,350||Above $194,175|
Deductions and Credits
Other ways you can change your tax bracket is by making the most of your deductions and credits. For 2012, the standard deduction for single filers is $5,950, while it rose to $11,900 for married couples who will file jointly. Deductions are also awarded for retirement account contributions, buying a home and dependents. To figure out where you may fall on the tax brackets, you should figure out your estimated adjusted gross income (AGI) based on your average wages and anticipated deductions.
This current tax schedule is similar to that of the previous two tax years. 2013 can bring significant changes if the schedule is not extended beyond 2012 unless legislation prevents such adjustments. The changes will ultimately cause a few brackets to merge, which will result in higher taxation for some individuals.