These tax brackets are based on your "Taxable Income" which is your AGI (Adjusted Gross Income) minus either standard or itemized deductions and your exemptions. The tax that you actually owe is affected by any credits you are due (such as child tax credit) and by any self-employment tax you owe (among other things).
What you need to watch out for is the AMT (Alternative Minimum Tax). I think Congress just passed something recently to raise the threshold for this tax for the current tax year. The AMT was originally meant to catch those in the higher brackets who had a lot of deductions, but the threshold was never raised as incomes went up, so taxpayers with what is now not considered a very high income are being affected, mainly households with two wage-earners.
(I've worked for JH for the past four tax seasons.)
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regna
(no subject)
Date: 2008-10-17 06:04 pm (UTC)What you need to watch out for is the AMT (Alternative Minimum Tax). I think Congress just passed something recently to raise the threshold for this tax for the current tax year. The AMT was originally meant to catch those in the higher brackets who had a lot of deductions, but the threshold was never raised as incomes went up, so taxpayers with what is now not considered a very high income are being affected, mainly households with two wage-earners.
(I've worked for JH for the past four tax seasons.)