IRS Tax Bracket For 2020

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IRS Tax Calculation Year 2020

WHAT IS THE IRS 2020 TAX BRACKET

Here are the details about the tax brackets and how to calculate tax for filing returns in the Accounting Year 2020. For this, the accesses must know how to calculate the progressive tax applicable on the income they have earned in the year 2019. So what is the IRS tax bracket for 2019 applicable for calculating the tax payable in the AY 2020?

Here’s how to calculate the total income earned during the financial year 2019 after taking into account all the deductions and find out where it falls in the pay scale mentioned below.

For the most ordinary income there are 7 tax slabs: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Also lets know How To GET IRS TAX form via online or offline mode here .

Flat Value VS Progressive Taxation – How Do Tax Brackets Work in the US?

Please be aware that the US tax system does not adopt Flat Value taxation. It works on a progressive tax system. This means that falling in one tax bracket doesn’t mean that you have to pay the entire tax based on that single bracket. As per the US tax laws, your taxable income is divided into chunks and then each chunk gets taxed according to its corresponding tax rate. Later all the chunks calculated separately are added together to arrive at the total tax.

What is Progressive Tax Calculation ?

Example of Progressive Tax Calculation: A person who earned $50,000 during the financial year 2019 will finally fall in the 3rd category of $39,476 – $84,200 where the applicable rate is 22%. However, he won’t pay the 22% tax on the entire $50,000. Instead, his income will be divided into 3 chunks starting from the lowest corresponding tax bracket to the highest one.

This means, for the first $9,700 he will pay 10% on 0 to 9700 as per the first bracket, then the amount of tax applicable on the next $9,700 to $39,475 slab will be 12%, and for the remaining amount between $39,476 to 50,000 he will pay 22%. The total amount of tax paid by adding the results from the 3 individual brackets will be approx $6,900. You can see the advantage here of the progressive rate where he is paying around 14% taxes on his total income instead of paying a flat rate of 22% according to the flat value system. This is called the Effective Rate which is much lower than the flat rate applicable from the highest tax bracket.

The Progressive rate of taxation is applicable to federal income taxes only. Individual states may apply state taxes based on a flat rate or may have a different tax bracket or they may simply skip charging tax.

Before you choose your tax bracket, carefully check your filing status as it may increase or lower the range of each bracket depending on the 4 filing statuses: Single, Married/Filing Jointly, Married/Filing Separately, or Head of Household.

2020 IRS Deadline Tax Filing

Note: The deadline for filing tax on income earned in the financial year 2019 falls on April 15, 2020, unless that date falls on a weekend or holiday or in case you get an extension. However, in the year 2020, the date for filing tax has actually been extended to July 15, 2020, as part of the government’s relief efforts due to the Coronavirus pandemic. For those ttaxpayers who need more time to prepare their returns, they can file the Form 4868 by July 15 for a further 3 months automatic extension until Oct. 15, 2020. Get full details 2020 IRS Tax Filing Deadline 2020 extension news and update .

Tax Calculation Slab IRS 2020

(Tax Due In April 2020, or in October 2020 if an Extension is Applicable)

2019 INCOME TAX BRACKETS FOR FEDERAL RETURNS

(Tax Due In April 2020, or in October 2020 if an Extension is Applicable)

Tax Rate Single Married/Filing Jointly Married/Filing Separately Head of Household
10% $0 to $9,700 $0 to $19,400 $0 to $9,700 $0 to $13,850
12% $9,701 to $39,475 $19,401 to $78,950 $9,701 to $39,475 $13,851 to $52,850
22% $39,476 to $84,200 $78,951 to $168,400 $39,476 to $84,200 $52,851 to $84,200
24% $84,201 to $160,725 $168,401 to $321,450 $84,201 to $160,725 $84,201 to $160,700
32% $160,726 to $204,100 $321,451 to $408,200 $160,726 to $204,100 $160,701 to $204,100
35% $204,101 to $510,300 $408,201 to $612,350 $204,101 to $306,175 $204,101 to $510,300
37% $510,301 or more $612,351 or more $306,176 or more $510,301 or more

Other IRS Tax Exemption Deductions In Income

Deductions:

Once you’ve calculated the gross income which includes all the money earned from the job, including other incomes from a side business, investment income or retirement income, etc.

Then, there are some adjustments applicable like a student loan, interest paid, tuition or other fees, state and local taxes, mortgage interest, certain medical expenses, Educator Expenses, charitable contribution, 401k Contributions, etc . Once all these are deducted, you arrive at the Adjusted Gross Income (AGI).

This is the final income ready for tax calculation; however, you can choose the Standard Deduction on this as well if you do not want to go with the Itemized Deductions so that a fixed dollar amount is deducted as per the slabs below based on your filing status. According to an estimate, over 90% of Americans choose Standard Deduction instead of the itemized deductions.

Standard Deduction for 2020
Filing status 2019 standard deduction Increase from 2018
Married filing jointly $24,400 $400
Married filing separately $12,200 $200
Single $12,200 $200
Head of household $18,350 $350

 

For accesses that are blind or age 65 or older, apart from the basic standard deduction, an additional standard deduction is also allowed which is equal to the sum of the additional amounts for both age and blindness.
If someone shows you as their dependent on their return, then your standard deduction amount will get lower.
For your ease, here are links to some of the best tax calculators for easy tax calculation. Simply put your gross income, specify your status, deductions applicable and it will give you your tax calculation to be paid in the year 2020.

IRS Tax Calculator

https://www.1040.com/estimate/

https://www.taxact.com/tools/tax-calculator

https://www.nerdwallet.com/taxes/tax-calculator

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