A tax bracket is a set range of income which is subject to a particular amount of taxable income rates. A tax bracket applies to various particulars including head of household. However, head of household refers to a filing category for those single or married people who maintain a home. It only applies to the qualified individuals. Note that in many tax rates; low income has a low rate of taxation while high income has high taxation rate. Lucky enough, there are various steps one can take to lower his or her head of household tax rates.
Currently, the federal income tax bracket for the top margin income is 39.6%. This rate hits those individuals with a taxable income of $415,050 and above for the single filers and also $466,950 and above for the married filers. Particularly, for the head of household filers, the rate strikes a taxable income of $441100 and above. On the other hand, for the small margin income, the rate is 10% ( Looney and Moore, 2016, p.89) . In this case, for single filers, the rate applies from $ 0- $9275 and for the married joint filers it lies from $0-$18550. For the head of household filers, the rate applies from $0 to $13250.
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For example, my taxable income is $150, 000. According to the federal income tax brackets in 2015, for instance, as a household filer, the tax rate which strikes me is a rate of 28 %. In the federal tax bracket for the household filers, the bracket which I fit in is from $130,150 to $210,800. In my case, it means that, to go to the lower bracket I am supposed to reduce the taxable income with an amount of $19,850.
To fit in the lower tax bracket, I should make household deductions. The possible household deductions I can make include hobby expenses which are claimed as miscellaneous deductions ( Wildauer, 2016) . However, it is only able to reduce the taxable income by a small amount. The other possible household deductions I can make include personal legal bills, the charitable mileage, Contributions to fraternal societies and medical B and D premiums.
Unfortunately, these deductions I can make are unable to place me in the lower bracket. However, next year and the other following years I can take various actions to reduce my head of household tax rates. I am planning to make household deductions through various steps which include giving to charity, topping off my retirement savings plans, paying the tax property bill early, selling my losers and also deferring my income. The above steps when well utilized can be useful.
References
Looney, A., & Moore, K. B. (2016). Changes in the Distribution of After‐Tax Wealth in the US: Has Income Tax Policy Increased Wealth Inequality?. Fiscal Studies , 37 (1), 77-104.
Wildauer, R. (2016). Determinants of US household debt: New evidence from the SCF.
