Income Tax 2007
COMPARE AND SHARE YOUR SALARY AND WIN A WAGE
Click on the next link if you want information about the: TAX REBATE or STIMULUS PAYMENTS
2007 Individual Income Tax Rates, Deductions and Exemptions
Tax return due 2007: April 15, 2008.
You have to pay federal income tax (see below) and on top of that State Individual Income Tax in most states. Your tax bracket depends upon your income and your tax-filing classification.
There are six Income tax brackets (ranging from 10% to 35%), the brackets per state vary. There are five classifications: single, married filing jointly, qualifying widow(er), married filing separately, and head of household.
2007 Federal Income Brackets and Tax Rates
Jointly or qualifying widow(er)
|10%||$0 - $7,825||$0 - $15,650||$0 - $7,825||$0 - $11,200|
|15%||$7,825 - $31,850||$15,650 - $63,700||$7,825 - $31,850||$11,200 - $42,650|
|25%||$31,850 - $77,100||$63,700 - 128,500||$31,850 - $64,250||$42,650 - 110,100|
|28%||$77,100 - $160,850||$128,500 - $195,850||$64,250 - $97,925||$110,100 - $178,350|
|33%||$160,850 - $349,700||$195,850 - $349,700||$97,925 - $174,850||$178,350 - $349,700|
|35%||$349,700 and more||$349,700 and more||$174,850 and more||$349,700 and more|
How does it work? For example: a single without children pays income tax above a filing threshold (see below) of $8,750. This threshold is - not for married filing separately and 65 or older - the Standard Deduction (see below) of $5,350 plus the Personal Exemption (see below) of $3,400. So, a single would actually pay 0% over the first $8,750 of income. After subtracting this amount from her or his income, the brackets start to work. Over the next $7,825 a single pays 10% tax; 15% over the amount between 7,825 and $31,850 etc.
2007 Personal Filing Threshold
|Married Filing jointly |
both under 65
| Married filing Separately|
|Head of Household|
|0 children||$8,750||$17,500||$3,400||$11,250||spouse died in 2007, file married for 2007|
|1 child||claim head
|$20,900||$14,650||spouse died in 2007 or in one of the 2 previous years and you are not remarried: $14,100|
|2 children||claim head
|65 or older||$10,050||$12,550|
|65 or older (one spouse), no dependent children||$18,550|
|65 or older (both spouses), no dependent children||$19,600|
|65 or older, 1 dependent child||spouse died in 2007 or in 1 of the two 2 previous years and you are not remarried: $15,150|
Deductions: Individual tax payers are allowed a choice when preparing their income tax returns. They can itemize their deductions from a list of allowable items and subtract those itemized deductions (see below) and their personal exemption deductions (see below) from their AGI to get their taxable income. Or they can choose to subtract the standard deduction (see below) and their personal exemptions. The choice between standard and itemized deduction depends on:
- a comparison between both types of deductions: what gives more money to subtract?
- do you have kept records of the items you want to subtract? - you need them as prove.
- if you are filing as 'Married, Filing separately', and your spouse itemizes, you have to do that to.
2007 Exemptions: for yourself (personal exemption), spouse (if you are married) or your dependents: $3,400 per person.
The exemption is not a subject to federal income tax, but it is the minimal amount of money you need to get by at a subsistent level. The exemptions amount comes on top of your threshold (see above) with a phaseout if your AGI is above a certain amount (see below). Above this AGI level you must reduce your exemptions by 2% for each $2500 ($1,250 for married filing separately). You can lose no more than 2/3 of the amount of your exemptions with this phaseout, so you are always entitled to a deduction of at least $1,133 (1/3 x $3,400).
Phaseout of exemptions
|Filing Status||Phaseout begins |
at AGI level:
|Deduction of $1,133 |
begins at AGI level:
|Married filing jointly
or Qualified widow(er)
|Married filing separately||$117,300||$178,550|
|Head of Household||$195,500||$318,000|
You can take an exemption for yourself - the personal exemption - or for your dependents, but you cannot do that if you can be claimed as a dependent by another taxpayer - even if this taxpayer doesn't actually claim you as a dependent. If you are married you can claim an exemption for your spouse filing jointly or separately - only if another taxpayer doesn't claim your spouse as a dependent. You cannot claim a person dependent unless that person is your qualifying child orqualifying relative.
You must always list the social security number (SSN) of any dependent for whom you claim an exemption. If you don't list the SSN the exemption could be denied.
2007 Personal Standard Deductions most people
|Deductions||Single||Married Filingjointly or Qualifying Widow(er)||Married Filing Separately||Head of Household||Dependents|
|Standard||$5,350||$10,700||$5,350||$7,850||the greater of $850 or the sum
of $300 plus
You take the Standard Deduction if the Standard Deduction is more than the total of Itemized deductions you can claim (see below). You cannot take the Standard Deduction if you are a nonresident or a dual-status alien this tax year, or if you are married filing separately and your spouse itemizes deductions.
See here TIPS for Itemized Income Tax Deductions:
If you itemize your deductions you cannot take the standard deduction and when the total of your itemized deductions are more than the standard deduction. You itemize if you had large uninsured medical and dental expenses or casualty or theft losses; you paid taxes and interest on your home; you made large charitable contributions; you made employee business expenses or educational expenses or various miscellaneous expenses.