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2023 Tax Brackets: What Are They and How to Reduce Taxes

Tax Brackets
Tax Brackets

Simply put, tax brackets help determine how much taxpayers need to pay the Internal Revenue Service (IRS) yearly. In this article, read and find out what tax brackets are and how to reduce your taxes!

Income Tax Return

Income Tax Return

The tax brackets were created by the Internal Revenue Service (IRS) to implement a tax system in the U.S. These tax brackets are created to determine how much money taxpayers need to pay the IRS every year. The amount of money to be paid depends on a taxpayer’s income. If the taxable income increases, the taxes to be paid will also increase, as reported by Forbes Advisor.

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How to Reduce Taxes

According to Forbes Advisor, a taxpayer can calculate taxes by dividing their income into the parts that will be taxed in each applicable bracket. Every tax bracket has its own tax rate. The bracket a taxpayer is in will be based on their filing status. This means it will be based on whether they are a single filer, married filing jointly or separately, or a head of a household.

A taxpayer can lower their income into another tax bracket by utilizing tax deductions. Tax deductions can help cut a taxpayer’s taxes by reducing their taxable income. These tax deductions include property taxes, mortgage interests, or even write-offs for charitable donations. In addition, tax credits like the Earned Income Tax Credit or the Child Tax Credit can also put a taxpayer into a lower tax bracket. Depending on a taxpayer’s financial situation, they can apply for both tax deductions and tax credits to reduce the taxes they have to pay.

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