Tax Planning With the 2014 Tax Brackets
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The first five 2014 tax brackets and their rates should look very familiar. The income levels have been bumped up a little for inflation, as they are every year. The 25% rate for single filers, for example, applied to taxable income between $36,251 and $87,850 in 2013. In 2014, the 25% rate for singles applies to income between $36,901 and $89,350.
That's not going to make a huge difference in your final tax bill. If nothing else material changes in your tax situation this year, and you generally don't have too little or too much withheld from your pay, you probably don't have much to worry about.
You may need to estimate your tax liability more carefully. For
example, if you pay estimated taxes, or you're tired of having way too much withheld from your pay all year, it's time to pay attention.
If you're in the 39.6% tax bracket, it's especially important to plan ahead so you don't have a rude shock in April of next year.
Follow these steps to take better control of your taxes in 2014:
1. Estimate your 2014 taxable income.
This is your income after taking into account before-tax payroll deductions, personal exemptions, the standard deduction or itemized deductions, and a host of other additions to and subtractions from your income. Start by looking at your 2013 return, and make adjustments as necessary to estimate your 2014 taxable income as closely as possible.
2. Find your tax bracket.
Using your taxable income and your filing status, find your marginal tax rate on this chart:Source: www.fool.com