Is your new tax rate - By: Marguerite

tax rates are extremely mystifying. So numerous taxpayers utterly get it wrong. Tax lawyer Anthony Parent explains what the myths are, in addition to how to stay away from frequent problems.

What is surprising to a good number Individuals to find out is that Federal Income Tax is less than one hundred years old. Congress wasn't granted this ability to impose a tax on income originally, but that did not stop Congress from trying. Think about this consequence, it took an Amendment, which overruled the Constitution, for the federal income tax to be delcared legal. From manufacturing economic activity, to generating a benovolent welfare state.

The Progressives ultimately won the day in getting the Amendment they needed approved which would grant power to Congress to tax income. Progressives' promises to use the new income tax to just tax the rich were quickly thrown aside.

Since the first income tax was lawfully imposed in 1913, we have seen tax rates go up and recede.Yet one thing is true: The Progressives' tacit pledge that the code would only affect the rich has established to be a total fraud. There are many other tax on income the IRS extracts, not just income taxes and those are imposed on all wage earners.

So the IRS just doesn't get to go after "income" taxes. Congress also gets to go after other non-income taxes, that just happened to be based upon income.

For individual taxpayers, the current tax bracket rates are 10, 15, 25, 28, 33 and 35%. Income is not the only determiner of tax bracket rate. Tax filing status also impacts tax rates of taxpayers.

But certain types of income are not taxed at the tax bracket rate. And on some types of income earnings, employment taxes are not imposed either. Individuals get preferable Mens Bags treatment for income earnings obtained from long-term capital gains. Tax-free muni-bonds are tax-free, of course. And dividends are taxed at a much lesser tax rate.

Higher wages earners may not even need to consider these tax brackets as the Alternative Minimum Tax applies. The taxes the AMT imposed may be higher than the standard tax brackets, so don't be tricked by the name. Countless times there is little minimum about the AMT. And significantly so. The reason is that the IRS charges a lower tax rate, but begins to eliminate beneficial deductions similar to local and state taxes.

In conclusion, tax brackets has little bearing on what a taxpayer will eventually be on the hook for. As there can be gigantic disparities which can lead to huge troubles.

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