When filing your taxes this upcoming year, you will be filing your taxes for 2012 and therefore can determine the amount of taxes you owe by the 2012 income tax brackets. However, the current Bush-Era tax cuts are about to expire and you may be affected. There are three possible scenarios for the 2013 tax brackets, and Congress has until December 31, 2012 to decide.
How Much You Will Owe When You File In 2013
When you file your 2012 taxes before April 15, 2013, the amount of taxes you owe are determined by the 2012 tax bracket rates listed below. Keep in mind that the “taxable income” used in this table is not your gross income. Taxable income is generally some or all items of income that are reduced by expenses and other deductions.
How The Expiring Tax Cuts Could Affect You
The Bush tax cuts are set to expire at the end of 2012, while this may not affect the amount you will owe this upcoming year, the first paycheck you earn in 2013 will fall under the new tax bracket. The 2013 income tax brackets apply to money that you earn during 2013.There are three possible scenarios on how the 2013 tax brackets could affect you and Congress only has until the end of December to decide.
Three Most Likely Scenarios For The 2013 Tax Brackets
1. Tax Brackets Proposed by President Obama: Expiration of the Bush-era tax cuts expire for high income taxpayers only. *Married filing separately, has not yet been determined.
2. Congress Proposed Tax Brackets: Bush tax cuts extended for all taxpayers. *Married filing separately, has not yet been determined.
3. If they cannot reach a compromise: Bush tax cuts expire for everyone. *Married filing separately, has not yet been determined.
There is also a chance that the tax brackets for 2013 might differ slightly from one of the above scenarios. It may be several months before anyone has a clear indication on what the 2013 tax brackets will be. We will let you know when Congress has reached a decision and the 2013 tax brackets are finalized.