Individual Income Tac In USA( Salaries and Wages) 2020

Abid Hussain January 1, 2021 0

calculator-385506_640Individual Income Tax (Salaries and Wages)
There are four types of Individual filing status.
1. Individual filing separately
2. Individual filing head of household
3. Married filing separately
4. Married filing jointly
The computation of taxpayers’ tax liability depends on their filing status, as discussed further below. The amount of the standard deduction also depends on filing status.
The taxpayer has two option of deduction to adopt for filing the return :
1. Standard deduction
2. itemized deduction

Standard deduction
Types Standard Deduction
Individual filing separately 12400
Individual filing Head of household 18650
Married Filing separately 12400
Married Filing jointly 24800
• The standard deduction amount is indexed for inflation.
• When the sum of taxpayers’ itemized deductions exceeds the standard deduction, taxpayers may choose to itemize
itemized deduction
a) Interest on Mortgage, charitable contributions
b) Taxpayers may also claim up to $10,000 ($5,000 for married taxpayers filing separately) in total deductions for state and local taxes
c) There is an additional standard deduction for the elderly (taxpayers age 65 and older) and the blind.

Other Concepts
• Medical expenses can be deducted to the extent they exceed 7.5% of AGI.
• The United States levies tax on its citizens and residents on their worldwide income. Non-resident aliens are taxed on their US-source income and income effectively connected with a US trade or business (with certain exceptions).
Personal income tax rates 2020
Individual filing separately

Taxable income (USD) Tax rate (%)

0 to 9,875 :                   10%
9,876 to 40,125:          12%
40,126 to 85,525 :       22%
85,526 to 163,300:     24%
163,301 to 207,350 :  32%
207,351 to 518,400:   35%
518,401+ :37%

Individual filing head of household

Taxable income          Tax rate (%)

0 to 14,100                  10%
14,101 to 53,700         12%
53,701 to 85,500        22%
85,501 to 163,300      24%
163,301 to 207,350    32%
207,351 to 518,400    35%
518,401+                      37%

Married filing separately

Taxable income              Tax rate (%)

0 to 14,100                      10%
14,101 to 53,700             12%
53,701 to 85,500           22%
85,501 to 163,300         24%
163,301 to 207,350       32%
207,351 to 518,400       35%
518,401+ 37

Married taxpayers filing jointly (1, 2)

Taxable income            Tax rate

0 to 19,750                     10%
19,751 to 80,250           12%
80,251 to 171,050         22%
171,051 to 326,600      24%
326,601 to 414,700     32%
414,701 to 622,050     35%
622,051+ 37

Notes:
1. The maximum federal tax rate on capital gains is 20% for assets held for more than 12 months. The graduated rates of tax apply to capital gains from assets held for 12 months or less.
2. Non-resident aliens may not take advantage of the head of household status or joint return rates.

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