How to Figure Tax Brackets

Video Transcript

"Hi, I'm Julie Kidd. I'm an asset management consultant in Atlanta, Georgia, and today I'm going to talk to you about how to figure out your tax bracket. The tax bracket is the rate you pay on the last dollar that you have earned but as a percentage. To determine your tax bracket you must first know your taxable income for the year. This can be found on your IRS form 1040, line 43. Your taxable income is your total income less your deductions and exemptions. Your tax bracket also depends on your filing status which you can find on your 1040 underneath your name and address. You can visit the IRS's official website at www.irs.gov and then in the search bar you can type in tax brackets and specify the year in which you are looking. When you pull up your tax brackets it will give you a tax rate schedule and in this schedule you will find several different sections. One will show you tax brackets for if you are single, a tax bracket schedule for if you are filing married filing joint or married filing separately. In this particular chart we will look at the married filing jointly, and if you file jointly and your total income was $70,000 per year your tax bracket would be 25%. Your first $16,050 is paid at a 10% tax bracket. Your tax bracket for between $16,050 and $65,100 is 15% and then it continues to jump, $65,100 to $131,450 is 25% so in this case a couple making $70,000 that file jointly on their tax return is at a 25% tax bracket."