At DAFS we work with our clients to help them understand how to plan in advance for each tax season. Providing the necessary steps to help them understand:

What is your current tax bracket

There are seven federal income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%. 

Example of a head of household with 2 qualifying dependents, with $37,000 in income. After you substract the standard deduction of $19,400, you're taxable income = $17,600. You pay 10.35% on the taxable about, which gives you a total federal tax of $1822 That puts you in the 12% tax bracket for the 2022 tax year (taxes filed in 2023).  However you do not pay 12% on all $37,000? You pay only 10% on the first $14,650; you pay 12% on the rest. 

$37,000 Income - $19,400 (Standard Deduction) = $17,600