Christmas commercials seem to come earlier each year, and so too do end-of-year tax stories. But be of good cheer because many of these articles seem to focus on ways to reduce your IRS bill. Bill Bischoff had one of the better and more comprehensive pieces this month on MarketWatch.com. Here is some of the information he provided:
“Income Tax Rates Are Unchanged for All but Higher-Income Individuals
“For most individuals, the federal income-tax rates for this year are the same as last year: 10%, 15%, 25%, 28%, 33%, and 35%. However, the American Taxpayer Relief Act (ATRA), passed at the beginning of this year, increased the maximum rate to 39.6%. That rate only affects singles with taxable income above $400,000, married joint-filing couples with income above $450,000, and heads of households with income above $425,000. For 2014, the tax bracket cutoffs are slightly higher.
“Capital Gain and Dividend Tax Rates Are Unchanged for All But Higher-Income Individuals
“The federal income-tax rates on long-term capital gains and dividends for this year are also the same as last year for most individuals: either 0% or 15%. However, the ATRA raised the maximum rate to 20% for singles with taxable income above $400,000, married joint-filing couples with income above $450,000, and heads of households with income above $425,000. For 2014, the thresholds for the 20% maximum rate will be $406,750, $457,600, and $432,200, respectively. Folks with taxable income below these levels will pay a 15% federal rate on long-term gains and dividends or 0% for gains and dividends that would otherwise fall within the 10% or 15% brackets.”