Download Federal Income Tax Overview 2024: Rates, Credits, and Exemptions and more Exams International Management in PDF only on Docsity! Federal Income Tax Overview Updated 2024 Tax Rate Schedules ANSFour schedules based on filing status with different income ranges Tax Bracket ANSRange of income subject to a specific tax rate Tax Tables ANSUsed for taxable income under $100,000 to determine tax liability Marriage Penalty ANSHigher tax for couples using joint filing compared to single filing Marriage Benefit ANSLower tax for couples with a sole wage earner Net Investment Income Tax ANS3.8% tax on certain investment income for higher-income taxpayers Kiddie Tax ANSTax on children's unearned income at trust and estate rates Alternative Minimum Tax ANSEnsures a minimum tax amount for taxpayers with income AMT Formula ANSCalculation method for Alternative Minimum Tax AMT Exemption ANSDeduction to determine Alternative Minimum Tax base AMT Rate ANSApplicable rate for multiplying the AMT base AMT Base ANSAmount after subtracting AMT exemption from AMTI AMTI Adjustments ANSModifications to regular taxable income for AMT computation State Income Taxes ANSDeductible for regular tax but not for AMT Property Taxes ANSDeductible for regular tax but not for AMT State Tax Refunds ANSExcluded from taxable income for AMT purposes Itemized Deductions ANSInclude medical expenses, home mortgage interest, charitable contributions, and gambling losses AMT Exemption Phaseout ANSReduction by 25 cents for every dollar AMTI exceeds threshold Capital Gains Rates ANS0%, 15%, or 20% rates for certain capital gains Net Investment Income ANSIncludes interest, dividends, annuities, royalties, rents, and more Kiddie Tax Base ANSChild's net unearned income subject to taxation Kiddie Tax Application ANSCriteria for applying tax on a child's unearned income Federal Income Tax Overview Updated 2024 AMT Threshold Amount ANSLevel at which AMT exemption starts to phase out Tax-Advantaged Income ANSIncome taxed at lower rates, e.g., capital gains and dividends Filing Status ANSDetermines the applicable tax rate schedule for individuals Taxable Income Levels ANSCriteria for using tax tables instead of tax rate schedules Alternative Minimum Tax (AMT) ANSTaxpayers compute this by subtracting regular tax from tentative minimum tax. AMT Rate Schedule ANSConsists of 26% and 28% brackets based on AMT base. Exemption Amount ANSAmount deducted from AMTI before AMT calculation. FICA Taxes ANSEmployment taxes for Social Security and Medicare. Self-Employment Taxes ANSFull FICA tax burden on self-employment earnings. Social Security Tax ANS6.2% of employee salary, with a wage base limit. Medicare Tax ANS1.45% on salary up to $200,000, 0.9% above. Form 1099 ANSReport of gross income for independent contractors. Form W-2 ANSReport of compensation for employees. Tax Credits ANSDirectly reduce tax liability dollar for dollar. Nonrefundable Credit ANSReduces gross tax liability to zero, not refunded if excess. Refundable Credit ANSCan result in a refund if it exceeds gross tax liability. Marginal Tax Rate ANSTax rate applied to the last dollar of income. Estimated Tax Payments ANSQuarterly payments to cover self-employment tax obligations. For AGI Deduction ANSDeduction allowed before calculating adjusted gross income. Taxpayer Classification ANSDetermining if an individual is an employee or independent contractor. Tax Policy Tools ANSTax credits directly impact taxes due without changing rates.
