US Tax Information

The amount of money due when you file your return in the US is based on the bracket of your income. A tax bracket is the percent rate that you pay on your income, the percent increasing as your income rises. This percentage is a misnomer, though, as the rate you actually pay in taxes is usually less than that. In 2003 the tax brackets were changed in order to streamline calculations, the new brackets being 10%, 15%, 25%, 28%, 33%, and 35%. So if your taxable income is, for example, within the 28% bracket, this does not mean that all of your taxable income is taxed 28%. This means that the portion of your income that is within the 10% bracket is taxed 10%, the portion in the 15% bracket is taxed 15%, and so on up to the final portion that is within the 28% bracket. Because of this system, your actual rate of taxes can be significantly lower than your tax bracket.

Social Security Tax Information

In the US, taxes are withheld from your paycheck for government social security programs. When working for an employer, 6.2% of your wages are withheld to be paid in to the program. Should you be self-employed, however, twice that amount will be paid to the government for the social security programs. In an ideal situation, the wages withheld by the government are paid back after retirement. The amount paid back per month is based on the amount of earnings that were put in to the social security account, as well as the age at which you choose to start receiving benefits. Although the age’s at which you can begin to receive benefits varies a bit, the average age for retirement, and the receiving of social security benefits, is 65.

Child Tax Credit Information

Qualifying children can be claimed as tax deductions in order to reduce your taxes by up to $1000 per qualifying child. In order for a child to qualify, he or she must have been under the age of 17 at the end of the previous year, must be your son, daughter, adopted child, stepchild, or foster child, and the child must be a US citizen. Should the amount you deduct from your taxes due exceed the amount you originally owed, some or all of the difference can be claimed as additional child tax credit. This additional child tax credit can potentially allow a tax-payer to receive a refund even if no taxes are owed.