TAX TIP AND INFORMATION CORNER
It’s Tax Season Again!
"The tax tip information has been furnished by Dr. DuWayne L. Dockter, Concordia University School of Management, for your personal consideration and research. Individuals should not rely on this information solely, but should seek the advice of their tax counsel or another tax professional."
Things to Remember:
- Honorariums: Professional income in the form of honorariums received for performing weddings, funerals, baptisms and counseling are correctly reported as self-employment income on Schedule C." (B.J. Worth, Tax Guide for Ministers and Religious Workers).
- W-2 employees: Common law requires taxpayers to report their income on the 1040 which includes ministers and lay workers.
- FICA Social Security Benefit Cap: In 2007, the maximum amount of taxable wages and salaries applicable to social security tax has been raised to $97,500 (6.2% portion of FICA). There is no cap on the FICA Medicare portion.
- FICA Social Security Tax for a Minister: “Contributions to a TSA account by a dual-status minister are not subject to social security and Medicare tax. However, contributions to a TSA account by a lay employee are subject to social security and Medicare tax withholding" (B. J. Worth, Tax Guide for Ministers and Religious Workers).
- Parsonage Allowance: A retired minister receiving distributions from a qualified retirement plan "may have a parsonage allowance designated by the former employer or denominational pension board”. However, distributions from an IRA or a Keogh retirement plan cannot be designated as non-taxable housing. (B. J. Worth, Tax Guide for Ministers and Religious Workers).
- Earned Income Credit applicable to Ministers: No longer are the following items included in the definition of earned income when calculating earned income credit: salary deferrals, cafeteria plan reductions, and educational assistance benefits. Housing allowance is considered as earned income in calculating the earned income credit. There may be other income earned by a minister which are not considered earned income (e.g., see the rules regarding approved 4361 and 4029 filers).
- Self-insured Medical Reimbursement Plans: These plans can be established by employers with more than 50 employees, self-employed individuals, and individuals without insurance coverage, and are not taxable as income to the employee.
- Itemized Deduction Phaseouts: For single taxpayers in 2007, the phaseout begins with $156,400 and married filing separately at $78,200.
- 401K/403B Plans: The elective deferrals for a 401K/403B tax sheltered accounts in 2006 are limited to $15,000; $15,500 in 2007. Other contributions may reduce the limit. A taxpayer who has attained 50 can also take advantage of a catch up provision ($5,000) in 2006 and 2007. Currently, the limitation for defined contribution plans under Section 415(c)(1)(A) is $44,000; $45,000 in 2007
- Education IRA (Coverdell Education Savings Account – CESA): A non-deductible education IRA can be established for a designated beneficiary such as a relative (a family member) under the age of 18 (older if a special needs beneficiary). The beneficiaries may also contribute to their own IRA established for their benefit. The earnings and distributions for qualified education expenses are tax-exempt if used for qualified elementary, secondary, or post-secondary education. Qualified expenses are expanded to include board and room (not included under the definition for qualified education expenses for the Hope or Life-Long Learning Credit) if the IRA beneficiary is considered at least half-time. The IRA may also be rolled over to another designated individual who has not reached their 30th birthday (older if a special needs beneficiary). The maximum contribution of $2,000 is subject to an income phase out limit beginning with $95,000 and $190,000 respectively (single phase out dollar for dollar of $15,000 and married taxpayers phase out dollar for dollar of $30,000). For calculating excess qualified education distributions income inclusion, see the IRS publications.
- Roth IRA: Contributions to a Roth IRA is not tax deductible but the distribution from this fund will be tax free if a holding period of 5 years has been satisfied and the individual was at least 59 1/2 at the time of the first distribution. Funds can also be drawn out without a penalty due to a death, disability, or used for qualifying first time homebuyers (not to exceed $10,000). Phaseouts for a Roth IRA begins at $95,000 for a single taxpayer and $150,000 for a married couple.
- IRA Roll Over: Warning! Do not roll over any portion of a qualified plan distribution to a Roth IRA after 2001. If an individual wishes to place these funds eventually into a Roth, the funds must first be placed in a traditional IRA and then converted. See the IRS publications for applicable penalties (if any) and the amount of income to be included in gross income.
- IRA Contribution Limits: For the tax years extending from 2005 to 2007, the maximum annual contribution to an IRA (traditional, non-traditional, or Roth) is $4,000. Joint filers can contribute up to $8,000 ($4,000 each). In 2008 to 2010, the contribution will be $5,000. A catch up provision was made available for individuals 50 and older. The catch-up contribution is $1,000 after the 2005 tax year.
- Education IRA: If your child is under age 18, you can establish an education IRA (note phase out limits for high income taxpayers – see below) for the child. It is not deductible but the earnings are tax free; then, the distributions will be tax free if the beneficiary use the distributions for qualified higher education expenses. (Beginning with the 2002 tax year, funds could be used for elementary and secondary education expenses. The maximum annual contribution is $2,000 per year until the beneficiary reaches their 18 birthday. The definition of qualified expenses on the elementary and secondary level has also been expanded to include tutoring, computers, room, board, uniforms, and other items.) The IRA can also be rolled over to another child. Distributions from an education IRA do have an impact on your hope scholarship or lifetime learning credit(s). The bottom of the phase-out range is $190,000 for married taxpayers. And $95,000 for a single taxpayer. Other types of taxpayer(s) such as a trust can also now contribute to an education IRA.
- IRA Contributions: Anyone less than 70 1/2 years of age who has taxable compensation can contribute to a traditional IRA or to spouse’s IRA if the spouse is under 70 1/2 and a joint-return is filed. Compensation includes wages, salaries, commissions, tips, bonuses, and professional fees, earnings from self-employment, and alimony or separate maintenance payments.
- IRA Compensation Basis: In terms of an IRA, rental income, interest, dividends, pensions, and annuity income are not considered as compensation in computing the maximum amount to be deducted for AGI (adjusted gross income).
- IRA adjustment: If the taxpayer is covered by a retirement plan at work, a traditional IRA deduction will be reduced or eliminated. In 2006, the deduction phase out begins at $50,000 MAGI (modified adjusted gross income) for single filers, $70,000 MAGI for joint filers, and 0 if the couple is filing separately.
- IRA eligibility: If one wage earner is covered by an employer’s retirement plan, and the other spouse is not (and is also a wage earner) handicapped, the phase-out rules will only effect the spouse covered by the retirement plan; however, there is a $160,000 MAGI ceiling in terms of a married couple that must also be considered (phase out starts at $150,000 for a married couple).
- IRA Contribution Deadline: Remember taxpayers have until the official due date (e.g., April 15) to contribute to an IRA. Individuals contributing to a Simple IRA have until the end of the first extension-filing period.
- IRA Charitable Giving: Taxpayers over 70 ½ can transfer tax free up to $100,000 per tax year to an eligible charitable organization.
- Retirement Savings Contribution Credit: After 2001, qualified taxpayers were allowed a retirement savings credit (e.g., 401K, 403B, IRAs) up to $1,000. The credit phase out is based on the taxpayer’s AGI and filing status; the credit will also be impacted by retirement distributions. The maximum AGI for the credit is $25,000, $37,500 and $50,000 (Single, Head of Household, and Married Filing Jointly) respectively.
- Prepaid Non-refundable Qualified Tuition: Tuition paid by a taxpayer for an individual attending an institution of higher learning qualifies as a gift or a deductible contribution (see Accounting Today, December 13, 1999 article).
- Qualified Moving Expenses: These “direct” moving expenses include reasonable costs for moving one's household goods and personal effects and cost of travel and lodging moving from the former residence to new residence. You can use the automatic mileage method (20 cents/mile in 2007) or the actual out-of-pocket costs for travel.
- Travel Expenses: "Travel as a form of education is not generally deductible". However, courts have held that an educator who teaches overseas can deduct the cost of their travel. Education trade- or business-related expenses for conferences or conventions attended in the United States qualify as a deduction. Some attendance at foreign conventions can also be deducted.
- Standard Mileage Method Rate: The rate for the automatic mileage method in 2007 is 48.5 cents per mile. (Special Note: 19 cents is allocated for depreciation.) Reminder: The cost of parking and tolls is not included in the automatic mileage method rate.
- Commuting Expenses: These costs are not usually deductible from Adjusted Gross Income (AGI) except for cases where you are traveling between jobs or traveling to and from a temporary work station or to and from an education site (e.g., taking night classes to improve your job skills).
- Job Search Expenses: These costs are deductible if one is searching for a job in the same trade or business as their previous area of employment. "No deduction is allowed for persons seeking their first job or seeking employment in a new trade or business."
- 2% Miscellaneous (Schedule A) Items: Un-reimbursed employee expenses [after the 50 percent reduction for meals and 50 percent reduction for entertainment], professional dues and subscriptions, teacher malpractice insurance premiums, expenses of job hunting, home office expenses, tax return preparation fees and accounting related expenses, hobby expenses (up to hobby income), investment expenses (up to investment income), income-producing fees on IRA account, and other miscellaneous itemized deductions are subject to a 2% floor. Special Note: The special cutback rule is reduced for certain areas of employment (e.g., interstate truck & bus drivers); 25% in 2007 and 20% cutback in 2008.
- Club Dues: Club dues are not deductible unless the taxpayer’s organizations primary purpose is to serve the community (e.g., Lions Club).
- Medical Related Equipment: A capital expenditure for a window air conditioner or dust elimination system (including the costs to operate and maintain such devices) is a Schedule-A-Medical deduction if the item is purchased as a medical necessity upon the advice of a physician. Some items may need to be capitalized which adds to the value of the home.
- Medical Expenses: Generally, medical expenses for qualified dependents are deductible. If an individual(s) would normally qualify as a dependent except for the fact that the dependent fails to pass the gross income test or files separately, the medical expenses paid on his/her behalf are still deductible. The same tests apply to child-care expenses for a parent(s) if they only fail the gross income test.
- Medical Travel Expenses: Out-of-pocket transportation costs related to medical travel are deductible as a medical expense. In 2007, the automatic mileage allowance option is 20 cents per mile (otherwise actual cost). It can be used in lieu of the actual medical-related travel costs. This applies to the travel to and from medical facilities and pharmacies.
- Self-Employed Medical Insurance Premium: Starting in 2003, the self-employed medical insurance premiums deduction for AGI increased from 70% to 100%.
- Value Added Fees: Fees (such as those paid for automobile title and registration) are not normally deductible; however, the portion of the fee based on the value of an automobile (e.g., automobile excise tax) or personal property tax is deductible. (e.g., The Washington License Fee is no longer tax deductible.)
- Property Taxes: If you bought or sold a home during the tax year and the escrow document indicates taxes and/or mortgage interest paid in addition to those reported on a 1098 form, remember to include these amounts on Schedule A.
- Interest on Qualified Education Loans: This interest is deductible "for" adjusted gross income. The maximum deduction is $2,500 and is phased out for taxpayers with 2007 MAGI between $55,000 and $70,000 ($110,000 and $140,000 on joint returns)." The taxpayer using this deduction must be liable on the loan and have paid the interest. This would include co-signers.
- Mortgage Points connected to a refinanced home loan: The portion of the loan which is used to refinance an existing loan is not deductible in the year paid; it must be capitalized and amortized over the life of the loan. Points applicable to excess financing above the pre-existing loan amount will be deductible in the year paid. (Alert: A prepayment penalty on the old loan may be considered as interest and thus is deductible in the year paid.) Tracer rules may apply when considering the points and/or interest for AMT purposes based on the use of the funds (see the IRS guidelines and/or your tax preparer for assistance).
- Contribution of Services: No deduction is allowed for a contribution of services (see your tax preparer for exceptions). However, out-of-pocket expenses (related to the contributed services including a standard mileage deduction of 14 cents per mile) are allowed in 2007.
- Earned Income Credit: If you are over 24 and less than 65 years of age and earn less than $12590 in 2007, you may be eligible for earned income credit. The phase out ceiling jumps up to $33,241 in 2007 for a single individual, $35,241 in 2007 for joint filers with one qualifying child and $39,783 in 2007 for joint filer with two or more children. If you have a qualified child, there is no age criteria as a taxpayer. There is a relationship test, residency test, and age test to meet the eligibility requirements. Remember, the taxpayer is not eligible for the credit if the taxpayer earns more than $2,900 in unearned income in 2007.
- Child Adoption Credit: Are you eligible for the adoption child credit? In 2007, up to $11,390 of the costs incurred may qualify for the credit. The credit can be taken during or after the year in which the expenses were incurred or paid; and is phased out for higher income taxpayers ($170,820 to $210,820.
- Dependent Care Credit: Are you paying for day-care services for a dependent child under the age of 13 or spouse or a qualified relative who is physically or mentally disabled in order to be employed; then, you may qualify for a child and/or dependent care expenses. In 2003, the maximum child and dependent care expense credit rose from 20% to 35% in 2007. “The dollar limit on the amount of qualifying expenses is $3,000 per child” (See Publication 503 for more detail). The amount of inputted earned income for a taxpayer who is disabled or a full-time student (with one child) is $250 for one qualifying or $500 for two or more qualifying dependents per month.
- Education Tax Credit: The Education Tax Credit is available to qualifying individuals (parents or the student) with qualifying education expenses as tuition and related expenses. The Hope Scholarship Credit is available to the taxpayer for each individual attending full-time an institution of higher learning for two years after completing secondary education. For 2007, a maximum credit of $1,650 is available for the Hope Scholarship Credit (100% of the first $1,100 and 50% of the second $1,100 qualified education expenses) compared to a $2,000 limit for the Lifetime Learning Credit. In 2007, this credit phases out for joint filers starting at $94,000 and $47,000 for single taxpayers. In contrast, the Lifetime Learning Credit is available for post-secondary education and vocational training on a part-time or full-time basis. The Lifetime Learning Credit is 20% of qualifying expenses of up to $10,000 (last changed in 2003).
- Education Expenses: These expenses are deductible "from adjusted gross income" if they maintain or improve existing skills or are required by your employer to maintain your current job. If the education qualifies an individual for a new job or meets the minimum educational standard for your current position, the education expenses are not deductible.
- Educator Expense Adjustment: In 2007, educators will once again be able to record an adjustment (up to $250) for their out-of-pocket education expenses. See the IRS publication for who and what type of expenses are eligible.
- Education Tax Credit: If you are interested in taking the Hope or Lifetime Learning Credit, you will need to fill out the 8863 form. You can order the form or reproduce it from the IRS Internet site (www.irs.gov). See the Tuition and Fees Deduction as an alternative to taking the credit (see IRS publication for qualifying expenses and double dipping rules).
- Tuition and Fees Deduction (Adjustment): Rather than taking a Hope or Life-Long Learning Credit, you may wish to claim a new adjustment for qualified student education expenses introduced in 2002. The amount of the adjustment can’t exceed $4,000 and is based on one’s filing status and adjusted gross income. The adjustment (deduction) for qualified tuition and related expenses is eliminated if the single taxpayer’s AGI exceeds $80,000 ($160,000 for married filers). Double dipping is not allowed in terms of education expenses.
- NHSC & Armed Forces Scholarships: The amount used for qualified education expenses (not to include regular living expenses) is excluded from gross income. These scholarships are usually contingent on future services.
- Filing Requirement: If you have tip income of at least $400 which you did not report to your employer, or received advanced earned income credit payment from your employer, you must file a tax return.
- Filing Separate: If your spouse filed a separate return and elected to itemize his/her deductions, then you must also itemize. Some of the advantages in filing separate may disappear as a result of the marriage penalties being phased out. The “Jobs and Growth Tax Relief Reconciliation Act of 2003” and the “Working Families Tax Relief Act of 2004” suspended the married standard deduction penalty until 2011. Tax rates for married couples also removed the marriage penalty for the 10 and 15 percent income tax brackets.
- Capital Gain Distributions Not Reported on Schedule D: As of 1999, capital gain distributions need not be reported on Schedule D if no other gains are recognized including the 28% rate gain items, un-recaptured section 1250 gains, or section 1202 gains. Also be aware that you may need to fill out schedule D if you are also filing form 4952.
- Dividend Distributions: Since 2002, ordinary dividends have been reported on the 1099-DIV form separately; you should not have to back out capital gains from the gross dividends to compute it. New, ordinary dividends will be taxed at the same rate as long-term capital gains (15%) for the tax years 2003 to 2007 subject to a 60-day holding period. These dividends will be classified as “Qualified Dividends.”
- Capital Gains Rate: For tax years 2003 to 2007, the ordinary capital gains tax rate was reduced. The new rates will be 5% (0 in 2008) and 15%. Reminder: A taxpayer can list all of their capital gain distributions from a mutual fund directly on form 1040 if the taxpayer has no other capital gain items to report.
- State Income Tax Refund Taxability: If you itemized last year, then you “may” need to include part or all of your state income tax refund on your 1040 form as taxable income. No need to include the refund if you didn’t itemize in the year in which the refund was created. It is called the tax benefit rule.
- Federal Tax Refund: This amount is not taxable since there is no tax benefit.
- Qualified Student Loan Interest: As now worded in the publications, interest you pay on a student loan is not deductible if you were furnished with employer-provided educational assistance, distributions from an education individual retirement account, U.S. savings bond interest that is nontaxable because you paid qualified higher education expenses, qualified scholarship that are nontaxable, veteran educational assistance benefits, and other nontaxable payments (other than gifts, bequests, or inheritances) received for educational expenses in excess of the qualified education expenses.
- Qualified Student Loan Interest: After 2001, the 60-month limit on deducting student loan interest was repealed. The eligibility phase-outs have also been raised. The bottom end of the phase-outs has been increased from $50,000 to $65,000 (MAGI) for single taxpayers and $105,000 to $135,000 for married tax payers. Currently, the maximum amount of deductible interest is $2,500.
- Qualified Education Expenses: In terms of Student Loans from a Qualified Lender applied towards Qualified Education Expenses, the education must have been received from a Qualified Education Institution eligible to participate in Department of Education student aid programs. The student must also have been carrying at least a one-half full-time course-load if filing or the Hope education credit.
- Post-Secondary Education Credits: If you have paid qualified tuition and related expenses in advance for the subsequent school year which begins within three months from the end of the current tax year, you can use this additional amount in calculating an education credit. Reminder: The Hope credit applies only to the first two calendar tax years of a person’s post-secondary education. (Use Form 8863 to calculate your Education Credit.)
- Credit for Child and Dependent Care Expenses: A qualified dependent must be under age 13 or one’s spouse who is physically or mentally incapable of self-care. If care is being given in the home, it must be equal to or more than 8 hours per sitting. The cost of care can include day camp fees, day care before or after school, and the cost of attending school before the child reaches the 1st grade.
- Credit for Child and Dependent Care Expenses: Married taxpayers must both work in order to claim the credit; however, an earning allowance is allowed for a non-working spouse who is a full-time student or disabled. The earning allowance is $250 per school month if you have one qualifying person in the home; $500 with two or more qualifying persons in the home. Remember that net earnings can include self-employment income, parsonage allowances, and other earned income items. The Credit can be claimed using Forms 1040 and 2441, or Form 1040A, Schedule 2.
- Foreign Income Tax Deduction: Did you have any foreign taxes withheld (reported on a 1099) on unearned taxable income (e.g., dividends or interest)? If your answer is yes and the amount withheld was not more than $300 ($600 if married filing a joint return) in 2005, you can "elect" to carry this amount to foreign income tax credit line on your Form 1040. There is no need to file Form 1116, Foreign Tax Credit, under this election. Please review your 1099s carefully from mutual funds and other payers. The carryover of unused foreign tax credit is not available if you take this election.
- Earned income credit: You must include your Self Employment Income as part of your earned income figure to calculate your credit.
- Interest from U.S. Savings Bonds: Cash basis taxpayers can elect to defer or include interest from Series E, EE, or HH bonds in their annual income. Changing methods might require the permission of the IRS. See your tax professional for help in deciding which approach is best for you.
- Amortization of Tax-Exempt Bond Premium: It is mandatory that the premium be amortized over the life of the bond (period from the time purchased to maturity) and its basis reduced annually. This is an election with regular bond investments. The premium is also a reduction of interest earned; this does not apply for tax-exempt bonds.
- Prizes and Awards: The fair market value of all prizes (e.g., free magazine subscriptions, door prizes, lottery winnings) and awards (e.g., work performance awards) must be included as part of your gross income even if you have not receive a 1099 form. Noted exceptions include ‘Employee Achievement Awards’.
- Group Term Life Insurance furnished by the Employer: Premiums paid by the employer for an employee’s term insurance exceeding $50,000 is includible as gross income. The amount to be included can be calculated using a special table furnished by the IRS.
- Accelerated Death Benefits or Chronically Ill Taxpayers: Individuals who can fit the definition of either may be able to receive non-taxable benefit payments from their life insurance company. The definition for the chronically ill fits the definition applicable to most common long-term care policies.
- Scholarships: Scholarships that exceed the cost of tuition and related expenses such as books, supplies, fees, and required equipment are includible in gross income. However, grants and other forms of aid will have to offset all education costs before applying the amount received for a scholarship. This is especially important when tuition is paid in part or full by the employer.
- Disability/Accident Income Insurance Benefits: It’s simple! Benefits from your employer’s paid insurance policy (whether purchased by the employer or through a cafeteria plan) are fully taxable unless used to pay for medical care expenses. See the IRS publications for explanation.
- Working Condition Fringe Benefits: Does your employer pay for your annual dues to organizations which normally would be required as part of your job? These items are not to be included as part of your gross income. If these items are considered tax deductible; then, the fringe benefit would usually not be included in gross income.
- Safe Deposit Box Expense: Are production of income items such as bonds, stocks, or items that grow in value over time included in your safe deposit box; then, the annual expense of the safe deposit box is deductible as a 2% miscellaneous item.
- Rental of Vacation Home: You must use the 15 day (10 percent of total days rented) rule to determine if a vacation home is considered as a personal residence, rental, or vacation/rental home. Homes rented for fewer than 15 days will be considered as a personal residence where gross income is not reported and related rental expenses are not deductible.
- Prepayment Penalty: Generally, prepayment penalties are considered as interest if the loan was secured with the principal or secondary home.
- Child Tax Credit: For the tax year 2007, the child tax credit is $1000 (per child) subject to phase-out rules based on the taxpayer's AGI (beginning with $110,000 for joint filers and $75,000 for single filers). Again, the “Working Families Tax Relief Act of 2004” has extended the credit through 2010. A special calculation is computed for taxpayers with three or more children. There is also a provision allowing some of the credit to be refundable.
- Repeal of Personal Exemption Phaseout: Starting with the tax year 2001, the phaseout limits on personal exemptions are being eliminated. The phaseout limits will be repealed completely by tax year, 2009. In 2006, the phase out will begin with $225,750 for those filing filing a joint return, $188,150 for heads of households filing, $150,500 for unmarried individuals filing, and $112,875 for married individuals filing separate.
- Gambling Losses: (not to exceed reported winnings) are Schedule A itemized deductions but are not subject to the 2% threshold.
- Church Worker Employee Business Expenses: Here is an interesting rule clearly stated in the IRS Publication 517. In short, a portion of your employee/minister related expenses are not fully deductible with the exception of mortgage interest and real estate taxes. For example: If your housing allowance is equal to 30% of your total gross income (tax and non-taxable), that is the portion of your business employee/minister expenses which cannot be deducted.
- Qualified State Tuition Programs: Is your child going to attend or is attending a private institution of higher learning; then, the student’s qualified education costs might be eligible for a qualified state tuition program. So long as the student spends the distribution on qualified higher education expenses, the original contributions and earnings are tax free. Warning! Not all of the states follow federal tax guidelines (code). The federal law also allows the beneficiary to change. Taxpayers are also able to move their QTP(s) around from one state to another state’s QTP plan.
- Education-Assistance Programs furnished by Employers: Good news! In 2003, the exclusion for “employer-provided education assistance” was extended to graduate level courses (limited to $5,250).
- Gift Tax: In 2006 & 2007, an individual can give $12,000 or less to each individual donee per tax year without paying a unified transfer tax until the donor has exhausted his/her cumulative $1,000,000 unified tax credit exclusion (unified transfer tax credit of $345,800) .
- Kiddie: The final bill, H.R. 4297, was signed into law raised the age limit to under 18 (versus under 14) in terms of the Kiddie Tax.
- Sales Tax: The Tax Relief and Health Care Act of 2006 extended the local and state sales tax deduction. Please see publication 600 on how to calculate, record, and note this elected deduction on Schedule A.
- Federal Tax Rate Schedules for 2007 (See Below):
|Not over $7,825
||10% of taxable income
|Over $7,825 but over $31,825
||$782.50 plus 15.0% of the excess over $7,825
|Over $31,825 but not over $77,100
||$4,386.25 plus 25.0% of the excess over $31,850
|Over $77,100 but not over $160,850
||$15,698.75 plus 28.0% of the excess over $77,100
|Over $160,850 but not over 349,700
||39,148.75 plus 33.0% of the excess over $160,850
||$101,469.25 plus 35.0% of the excess over $349,700
Married filing joint returns and surviving spouses
|Not over $15,650
||10% of taxable income
|Over $15,650 but not over 63,700
||$1,565 plus 15.0% of the excess over $15,650
|Over $63,700 but not over $128,500
||$8,772.50 plus 25.0% of the excess over $63,700
|Over $128,500 but not over $195,850
||$24,972.50 plus 28.0% of the excess over $128,500
|Over $195,850 but not over $349,700
||$43,830.50 plus 33.0% of the excess over $195,850
|Over $349,700 and above
||94,601 plus 35.0% of the excess over $349,700
Married filing separate returns
|Not over $7,825
||10% of taxable income
|Over $7,825 but not over $31,850
||$782.50 plus 15.0% of the excess over $7,825
|Over $31,850 but not over $64,250
||$4,386.25 plus 25.0% of the excess over $31,850
|Over $64,250 but not over $97,925
||$12,486.25 plus 28.0% of the excess over $64,250
|Over $97,925 but not over $174,850
||$21,915.25 plus 33.0% of the excess over $97,925
||$47,300.50 plus 35% of the excess over $174,850
Head of household
|Not over $11,200
||10% of taxable income
|Over $11,200 but not over $42,650
||$1,120 plus 15.0% of the excess over $11,200
|Over $42,650 but not over $110,100
||$5,837.50 plus 25.0% of the excess over $42,650
|Over $110,100 but not over $178,350
||$22,700 plus 28.0% of the excess over $110,100
|Over $178,350 but not over $349,700
||$41,810 plus 33.0% of the excess over $178,350
||$98,355.50 plus 35% of the excess over $349,700
- Estates and Trust Table for 2007 (See Below)
|Not over $2,150
||15% of the table income
|Over $2,150 but not over $5,000
||$322.50 plus 25% of the excess over $2,150
|Over $5,000 but not over $7,650
||$1,035 plus 28% of the excess over $5,000
|Over $7,650 but not over $10,450
||$1,777 plus 33% of the excess over $7,650
||$2,701 plus 35% of the excess over $10,450