Tax Planning

Tax Planning

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