Here are the four tax rate schedules of 2011 Federal Tax Brackets:
Single
| Taxable income over | But not over | Rate |
| $0.00 | $8,700.00 | 10.00% |
| $8,700.00 | $35,350.00 | 15.00% |
| $35,350.00 | $85,650.00 | 25.00% |
| $85,650.00 | $178,650.00 | 28.00% |
| $178,650.00 | $388,350.00 | 33.00% |
| $388,350.00 | 35.00% |
Married, Joint
| Taxable income over | But not over | Rate |
| $0.00 | $17,400.00 | 10.00% |
| $17,400.00 | $70,700.00 | 15.00% |
| $70,700.00 | $142,700.00 | 25.00% |
| $142,700.00 | $217,450.00 | 28.00% |
| $217,450.00 | $388,350.00 | 33.00% |
| $388,350.00 | 35.00% |
Married, Separate
| Taxable income over | But not over | Rate |
| $0.00 | $8,700.00 | 10.00% |
| $8,700.00 | $35,350.00 | 15.00% |
| $35,350.00 | $71,350.00 | 25.00% |
| $71,350.00 | $108,725.00 | 28.00% |
| $108,725.00 | $194,175.00 | 33.00% |
| $194,175.00 | 35.00% |
Head of Household
| Taxable income over | But not over | Rate |
| $0.00 | $12,400.00 | 10.00% |
| $12,400.00 | $47,350.00 | 15.00% |
| $47,350.00 | $122,300.00 | 25.00% |
| $122,300.00 | $198,050.00 | 28.00% |
| $198,050.00 | $388,350.00 | 33.00% |
| $388,350.00 | 35.00% |
Alternative Minimum Tax Brackets
Each year a taxpayer must pay the greater of an Alternative Minimum Tax (AMT) or regular tax.The AMT is a nearly flat tax on taxable as modified for AMT. As with regular Federal income tax, rates and exemptions vary by filing status. The lower rate and the exemption are phased out above certain income levels at 25% of AMT income. A lower rate applies (through 2012) on capital gains (and qualifying dividends). These amounts for 2011:
| Status | Single | Married Joint | Married Separate | ||
| Tax Rate: Low | 26% | 26% | 26% | ||
| Tax Rate: High | 28% | 28% | 28% | ||
| High Rate Starts | $175,000 | $175,000 | $87,500 | ||
| Exemption 2009 | $46,700 | $70,950 | $35,475 | ||
| Exemption 2010 | $47,450 | $72,450 | $36,225 | ||
| Exemption phase-out starts at | $112,500 | $150,000 | $75,000 | ||
| Zero 2009 exemption at | $299,300 | $433,800 | $216,900 | ||
| Zero 2010 exemption at | $302,300 | $439,800 | $219,900 | ||
| Capital gain rate | 25% | 25% | 25% |
To the extent AMT exceeds regular Federal Income Tax, a future credit is provided which can offset regular tax to the extent AMT does not apply in a future year. However, this credit is limited (see further details in the "AMT credit against regular tax" section). Regular tax used as a basis for computing AMT is found on individual Form 1040 Line 44.
Under the AMT, no deduction is allowed for personal exemptions or standard deductions and state, local, and foreign taxes are not deductible. Also, there is a huge bite to higher income earners who work in already high tax jurisdictions, like New York City, where there are both high city and state taxes. However, most other itemized deduction apply at least in part.
The way to avoid AMT is to have fewer AMT triggers. The most common of these are state income taxes and local real estate taxes. In any given year, if a taxpayer deducts significant taxes for state and local tax, AMT may be triggered. Some taxpayers defer payment until the following year, but in most cases, this just postpones an inevitable AMT assessment and penalties with state and local taxing authorities. If someone wishes to avoid AMT for good, do not work or live in high tax jurisdictions. This is not always possible, but this is the reason that the AMT has been so effective in extracting revenue. Half of all AMT receipts are from people making $150,000-$200,000 per year.
If you're unsure of your filing requirements, contact us. We can help with tax preparation, tax planning, and tax resolution. Call us at 888-727-8796 or email info@irsmedic.com.
