What is the Standard Deduction for Income Taxes?

The standard deduction is the amount that taxpayers can subtract from their adjusted gross income if they choose not to itemize deductions. The amount of the standard deduction is indexed annually for inflation. In 2017, the standard deduction is $6,350 for single tax filers and $12,700 for married couples filing jointly.

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What is a Person’s Marginal Tax Rate?

A marginal tax rate (also known as marginal tax bracket) refers to the percentage of the last dollar that someone earns (from their total annual income) that goes to taxes. There are currently seven federal marginal tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% in 2017.

For further information on marginal tax rates, based on taxable income and tax filing status, visit http://njaes.rutgers.edu/money/taxinfo/.

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What is the Capital Gains Exclusion for the Sale of a House?

Single taxpayers can exclude up to $250,000 of capital gains on the sale of a home, and married taxpayers filing jointly can exclude $500,000.

Taxpayers are eligible for the exclusion if they have owned and used a home as their main home for a period aggregating at least two years out of the five years prior to its date of sale. The exclusion is allowed each time that you sell a primary residence but no more than once every two …

If I Am Taking the Earned Income Tax Credit, Can I Also Claim the Child Tax Credit on My Income Taxes?

If you qualify for both credits, you can take both credits. You may also be able to claim the Child and Dependent Care Credit. Each of these tax credits has its own rules.

See IRS Publication 17 for general information on filing your taxes, Publication 596 for the Earned Income Tax Credit, Publication 972 for the Child Tax Credit, and Publication 503 for Child and Dependent Care Credit for information on who can deduct each type of credit. To receive …

Do You Have to Pay Income Tax on a Cash Gift?

Generally, cash or property that you receive as a gift or inheritance is not included in your income. Recipients of gifts do not need to declare them on their income tax return, regardless of the amount.

However, if a cash gift later produces income, such as dividends and capital gains, that income will be taxable and you will receive a 1099 form to indicate the taxable amount.

Donors can give cash gifts up to a certain amount each year without …

The Affordable Care Act and Income Taxes

Barbara O’Neill, Ph.D., CFP®

Extension Specialist in Financial Resource Management and Distinguished Professor

Rutgers Cooperative Extension

oneill@aesop.rutgers.edu

 

For the first time ever, during the 2014 federal income tax year, health insurance became intertwined with income taxes. More than 75% percent of Americans with year-long health insurance provided by an employer, private insurance policy, or other non-Marketplace health insurance source simply have to check the “Full-year Coverage” box on Line 61 of the 1040 tax form. For others, the process of …

What is the Difference Between Progressive and Regressive Taxes?

A progressive tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises. An example is the federal income tax, where there are six marginal tax brackets ranging from 10% (lowest-income taxpayers) to 39.6% (highest-income taxpayers). Most state income taxes have a similar progressive structure.

A regressive tax is the exact opposite. Higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers because the tax is not based on ability …

Income Taxes

The goal for taxpayers is to pay no more than the least possible tax owed. Avoiding taxes through legal tax strategies is not to be confused with illegal tax evasion. Legally avoiding taxes means using effective financial record-keeping, decision making, and planning strategies to reduce your total income tax. One example of good tax management is adjusting the amount of federal income tax withheld from your paycheck. If you receive a big income tax refund (over $500) each year, you …