What's your tax bracket?
Do you know your tax bracket? Understanding what rate was assessed on the last dollar of taxable income on your 2015 federal income tax return can help with 2016 tax planning as well as financial decisions you make throughout the year. For example, say you're wondering how much tax you'll save by increasing the pre-tax contribution to your retirement plan during 2016. The additional amount invested times your tax rate provides a quick estimate.
For 2016 planning, your estimated taxable income determines which of the seven federal tax brackets will apply. For instance, 2016 taxable income ranging from $75,301 to $151,900 puts you in the 25% bracket if you're married and filing a joint federal return. Keep in mind that your tax bill will not be 25% of your total taxable income. One reason: The rate only applies to the income in that bracket.
Since each bracket consists of a range of income, a planning opportunity is to "fill a bracket." That means you keep your income below the level that will push you into the next bracket. You could accomplish this by prepaying itemized deductions, making a partial conversion of a traditional IRA to a Roth, or taking a comprehensive family-level approach to planning.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, and all Chicagoland area.
Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain.Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at firstname.lastname@example.org.
For more free resources, such as Online Advisor Newsletters, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.
Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720
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To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!