If you earn money in the United States, chances are that some
of that money will be subject to federal income tax rates. 2014,
like every year, brings changes to those rates. While Congress
can always change the law, the Internal Revenue Service does a
great job of publishing the updated federal income tax rates.
2014 numbers, current as of Dec. 10, 2013, appear below.
Federal income tax rates 2014 edition:
Source: Internal Revenue Service, 2014 Form W-4S, as of
Dec. 10, 2013.
"Line 5" in the above chart refers to your taxable
income , which is your income after any deductions and exemptions
that you are entitled to claim.
Of course, not much is simple in the world of taxes. These tax
rates, which are in addition to the Social Security and Medicare
taxes that are withheld from your paycheck, apply to ordinary
income you may earn. Long-term capital gains and dividends are
taxed at different rates, an additional Medicare tax of 0.9% now
applies to high earners , as does an additional 3.8% net
investment income tax .
What you need to do about it
If you've got a decent salary, chances are good that some of your
income will be subject to these federal income tax rates. 2014
taxes, like in most years, will need to be paid through
withholding from your paycheck or through the quarterly estimated
Chances are, you don't yet know exactly what your 2014 income
or tax burden will be. While you may be subject to penalties if
you underpay your estimated taxes by too much, the Internal
Revenue Service lets you estimate and get close. The key is to
pay enough through timely estimated tax payments or payroll
withholdings to be covered by a
safe harbor provision. That way, you won't owe penalties if you
pay your remaining 2014 income tax due by its anticipated due
date of April 15, 2015.
Your reward after a career of paying taxes
After you've completed your career of working while
dutifully paying your taxes, it's time to reap the
rewards. Social Security plays a key role in your
financial security and is one of the most common benefits
available to American retirees.
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