Federal Tax Brackets 2011 What You Should Know

Federal Tax Brackets 2011 What You Should Know

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Kent Coggin Adding to the misunderstanding is the matter of Federal Tax Brackets 2011. Many taxpayers make more than a few mistakes.Tax attorney Anthony Parent explains what the myths are, and how to stay away from common entanglements. The notion of tax bracekts have somewhat Marxist roots, although many may disagree. In 1895, a challenge was made to the first peacetime income tax Congress assessed (outside martial law) and it was struck down as unconstitutional, as the Constitution expressly forbade direct taxes such as the income tax. It was deemed to be too big an invasion from powers Congress did not possess. The courts could not allow the income tax to remain because the Constitution did not give Congress the power to assess an income tax. With the Progressive\’s 16th Amendment in hand, Congress was now empowered to juice-up up the IRS with unforseen powers. The Progressives asserted that the new income tax would only affect the rich and would be used not just to increase tax revenue for more government spending, but also \”even the playing field.\” Not quite a hundred years has passed since the Revenue Act of 1913 and we have seen Federal Tax Brackets 2011 rise and drop. Yet one thing is true: The Progressives\’ promise that the tax law would only have an effect on the rich has proven to be a total fraud. There are numerous other tax on income the IRS extracts, not just income taxes and those are assessed on all income earners. One of the most baffling areas of the income tax is that there are additional taxes on income taxpayers pay besides income tax that are dependent upon their income. Puzzling enough? Well there are employment taxes, which Congress gets to impose a tax on, there are Social Security, Medicare and Unemployment insurance taxes. Under current tax law, there are 6 tax brackets for individual taxpayers: 10%, 15%, 25%, 28%, 33%, and 35%. Which bracket you fall into depends on whether you are single, filing married jointly, married filing separately or if you are head of household. But these tax brackets rates do not mention the \”employment taxes\” that are going to be assessed and will need to be paid. However, certain types of income earnings are not taxed at the tax bracket rate. Nor do these employment taxes apply. Long-term capital gains receive preferential tax treatment for individuals. Tax-free muni-bonds are tax-free. And dividends are taxed at a much better tax rate. But in lots of manners, these tax brackets even improperly calculate just the income tax paid. For many higher-income wage earners the Alternative Minimum tax will actually impose a higher tax. And that is what will have to be handed over — the Alternative Minmum Tax rate. The explanation the Alternative Minimum Tax is larger is the IRS won\’t allow certain deductions. In conclusion, Federal Tax Brackets 2011 has little bearing on what a taxpayer will ultimately be on the hook for. As there can be gigantic variances which can lead to giant troubles.

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