Is your NCAA bracket busted? Mine sure is – I’d hoped the three Iowa teams would have more success.
But all the talk about brackets made me think about a common misunderstanding about tax brackets.
Pop Quiz: If you are in the 25% tax bracket, does that mean your gross income is taxed at 25%? No. But this seems to be a common misunderstanding.
There are seven federal income tax brackets: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
Let’s say you are a single taxpayer who earns $35,000 per year. The first $9,075 of your income is taxed at 10%, and the remaining $25,925 is taxed at 15%. The higher your income, the more tax brackets you pass through. Taxpayers with high taxable income can pay up to seven different rates.
Understanding basics about tax brackets, and the tax code generally, can make a huge difference when it comes to charitable giving.
Smart charitable giving almost always means smart charitable giving tax strategy. About this huge, and hugely important topic, much more soon.
This short article is presented for informational purposes only, not as tax advice or legal advice. Consult a tax professional for personal advice.
Gordon Fischer Law Firm, P.C. is dedicated to promoting and maximizing charitable giving in Iowa. Gordon can be reached by phone at 515-371-6077; by email at gordon@gordonfischerlawfirm.com; and through his website at www.gordonfischerlawfirm.com.
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