Written By: Doreen Martel
Those who are salaried employees, hourly employees and those who are self-employed know that as the year wraps up, tax time will soon descend upon them. Some preparation for the filing due in April of 2015 may be necessary, especially for those in very low or very high tax brackets. It is typically helpful to understand what the taxable rates are well before preparing an annual tax return.
Single filer tax brackets
Single taxpayers often have to face steeper taxes than their married counterparts. For the tax year ending in December of 2014, single taxpayers can expect the following tax brackets.
- Earnings up to $9,075 – tax bracket is 10%
- Earnings between $9,076 and $36,900 – tax bracket is 15%
- Earnings between $36,901 and $89,350 – tax bracket is 25%
- Earnings between $89,351 and $186,350 – tax bracket is 28%
- Earnings between $136,351 and $398,350 – tax bracket is 33%
- Earnings between $398,351 and $400,000 – tax bracket is 35%
- Earnings over $400.001 – tax bracket is 39.6%
According to the Internal Revenue Service, a person who is married during 2014, even if it is the last day, has the legal right to file as married which can reduce their overall tax burden.
Difference for head of household
The Internal Revenue Service allows a single person to qualify as a head of household if they are financially responsible for a “qualifying person.” Under the rules, qualifying persons are persons for whom the taxpayer may claim a deduction and can include:
- Children – whether a person was married or not, if they maintained a home for at least six months out of the tax year and have a child they may qualify for head of household. This includes children born during the year (through December 31) provided the person may claim the child as a dependent. There is an important note to this as well: If a child has been kidnapped and remains missing for the entire year, they may still be claimed by the parent for tax purposes.
- Parents – if a child is caring for a parent and may claim that parent as a dependent provided they are paying for more than one-half of their upkeep. Support may include paying for nursing home care or other long-term care of the parent provided the parent is not filing their own tax return and/or can be claimed as a dependent on the return of another taxpayer.
- Other – siblings, adopted children, foster children, grandparents, nieces and nephews and even in-laws can be considered a qualifying person provided the support requirements are met.
There is a significant difference in tax brackets for those filing head of household versus single. The income differences are:
- Single person at a 10% tax bracket could earn a maximum of $9,075 while a head of household filer could earn $12,950
- Single person at 15% tax bracket could earn a maximum of $36,900 while a head of household filer could earn $49,400
- Single person at 25% tax bracket could earn a maximum of $89,350 while a head of household filer could earn $127,550
- Single person at 28% tax bracket could earn a maximum of $186,350 while a head of household filer could earn $206,600
- Single person at 33% tax bracket could earn a maximum of $405,100 while a head of household filer could earn up to $405,100
- Single person at 35% tax bracket could earn a maximum of $406,750 while a head of household filer could earn up to $432,200
During this year, there have been a number of changes to the tax code. In addition to potentially saving money by filing head of household, taxpayers should be certain they do not miss any important deductions or personal exemptions offered through the tax code.