Federal Income Tax Return

Understanding Federal Income Tax

What Is Federal Income Tax?

Federal income tax is a type of tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities. This progressive tax system means that higher-income earners are taxed at higher rates. For the 2024 and 2025 tax years, federal income tax rates range from 10% to 37%, spread across seven tax brackets. The tax applies to all forms of earnings, including wages, salaries, commissions, bonuses, tips, investment income, and certain types of unearned income.

How Federal Income Tax Works

The federal government collects taxes on the income of its residents, contributing significantly to the total tax revenue. In fiscal year 2023, the U.S. government collected $4.44 trillion in revenue and spent $6.13 trillion, resulting in a $1.70 trillion deficit. The federal income tax system is designed to fund various government programs and services, including Social Security, Medicare, and national defense. This system ensures that essential services and infrastructure are maintained for the benefit of all citizens.

Federal Income Tax Rates and Brackets

Federal income tax rates and brackets are adjusted annually for inflation. For the 2024 tax year, the tax brackets are as follows:

Tax Rate	For Single Filers	For Married Individuals Filing Joint Returns	For Heads of Households
10%	$0 to $11,600	$0 to $23,200	$0 to $16,550
12%	$11,600 to $47,150	$23,200 to $94,300	$16,550 to $63,100
22%	$47,150 to $100,525	$94,300 to $201,050	$63,100 to $100,500
24%	$100,525 to $191,950	$201,050 to $383,900	$100,500 to $191,950
32%	$191,950 to $243,725	$383,900 to $487,450	$191,950 to $243,700
35%	$243,725 to $609,350	$487,450 to $731,200	$243,700 to $609,350
37%	$609,350 or more	$731,200 or more	$609,350 or more

Source: Internal Revenue Service, “Revenue Procedure 2023-34.”

These tax rates and brackets determine the tax liability of individuals and corporations, ensuring that the tax burden is distributed according to the ability to pay.

Calculating Taxable Income

Taxable income is the amount of income subject to federal income tax. It is calculated by subtracting deductions and exemptions from gross income. Gross income includes all income earned or received from various sources, such as wages, salaries, tips, and investment income. Deductions and exemptions reduce taxable income, resulting in a lower tax liability. Common deductions include the standard deduction, mortgage interest, charitable contributions, and medical expenses. By understanding how to calculate taxable income, taxpayers can better manage their finances and potentially reduce their overall tax burden.

Top Advantages of Hiring Federal Income Tax Return Preparer

If you’re like most people, tax season is a time of frustration and anxiety. But it doesn’t have to be. One way to ease the pain of filing your taxes is to hire a professional federal income tax return preparer. While it may cost a bit more upfront, doing so can save you time and money in the long run, not to mention stress.

Federal income tax brackets are structured under a progressive tax system, meaning that different portions of your income are taxed at different rates. Understanding these brackets is crucial for effective tax planning.

Another advantage of hiring a tax preparer is that they can help you with extensions if needed. For example, if you need more time to file your taxes, you can use Form 4868 to get a maximum extension of six months from the April 15 tax payment deadline (to October 15). But remember, this extension does not make federal income tax rates apply to payments.

And Then

So if you owe taxes, you should estimate what you owe and pay what you can to avoid a penalty and interest. Your employer must send your W-2 form by January 31, which shows the income you earned for the previous year and the taxes withheld from those earnings. Individuals and businesses earning income from U.S. sources are obligated to file federal taxes.

All money earned, whether as a wage, salary, cash gift from an employer, investment income, business income, tips, gambling income, bonuses, or unemployment compensation, constitutes income for federal tax purposes. You can file your federal tax return without a 1099-G form, as explained below in Filing Your Return Without Your 1099-G. A 1099-G form is a federal tax form that lists the total amount of benefits TWC paid you, including unemployment benefits (both regular and federal extended benefits).

Here are the top advantages of hiring a professional tax preparer:

Accuracy

One of the most significant advantages of hiring a professional tax preparer is their ability to ensure you file your individual income taxes accurately. The marginal tax rate applies to the last dollar of a taxpayer’s income and varies based on different tax brackets. This becomes especially important if you have complex finances or experienced significant life changes during the tax year, such as getting married, having a baby, or buying a house. A professional will navigate the complexities of the federal income tax system and help you avoid errors.

Convenience

When you hire a tax preparer, you don’t have to worry about doing your taxes. They will handle everything for you and ensure everything is filed correctly. This can save you a lot of time and stress.

Save Time

Hiring a professional tax preparer can save you a lot of time. This is especially true if you have a complex tax situation. Rather than spending hours (or even days) trying to figure everything out on your own, you can hand it over to your tax preparer and let them handle it.

Get The Maximum Tax Refunds

Professional tax preparers understand all the intricacies of the tax code and can help you maximize your federal tax refund or minimize your taxes owed. They will ensure that you file everything correctly and on time, so you won’t have to wait for your money. This approach saves you a lot of time and hassle in the long run.

For single filers in 2024, using the services of a professional tax preparer ensures you file your taxes accurately and efficiently, increasing your chances of receiving the maximum tax refund possible as a head of household.

In rare cases, such as when one spouse is subject to tax refund garnishing because of unpaid debts to the state or federal government, opting for tax filing status over the “married filing separately” tax status can be advantageous. Typically, though, married filing jointly still provides a tax break.

Peace of Mind

When you hire a tax preparer, you can rest assured that your taxes are in good hands. They will ensure everything is done correctly, so you don’t have to worry about it. This can give you peace of mind during tax season.

Get Expert Advice

When you hire a tax preparer in December, you can get expert advice on how to handle your taxes. They can help you plan for the future and ensure that you take advantage of all the deductions and credits you are entitled to. This can save you a lot of money in the long run.

Avoid Stress

One of the best advantages of hiring a tax preparer is that it can help you avoid stress. Tax season can be stressful, but it can be a lot easier to handle if someone takes care of everything for you. This can make the whole process a lot less daunting.

Save Money

In some cases, hiring a tax preparer saves you money. If you are self-employed or have a complex tax situation, a tax preparer helps you take advantage of deductions and federal tax credits that you might not know about. This strategy can save you a lot of money in the long run.

Audit Assistance

One of the top benefits of hiring a federal income tax return preparer is that they can offer audit assistance under federal law. If the IRS ever comes knocking on your door, having someone familiar with the federal tax brackets and the tax code can make all the difference.

A tax preparer can help you gather documentation and support to prove that you filed your tax return accurately. This approach helps you avoid any penalties or additional taxes that the IRS may assess.

Find Credits that May Have Otherwise Been Missed

A tax preparer can help you find deductions or credits you may have missed in the current year, potentially placing you in a lower tax bracket. Often, tax preparers in the United States are familiar with deductions and credits that you may be eligible for but would not otherwise know about.

By taking advantage of all the deductions and credits available, you can reduce your overall tax liability and potentially move into a lower tax bracket or higher tax bracket or brackets, thereby lowering your effective tax rate and either decreasing your tax burden or increasing the size of your tax refund.

Deal With Deductible Preparation Fees

Finally, one of the top advantages of hiring a federal income tax return preparer is that the fees associated with medical expenses along with preparing your marginal tax return may be deductible. If you itemize your tax return deductions, the Internal Revenue Service (IRS) fees can be deducted from your gross income as adjusted. This can help reduce the taxes you owe on your return to the federal government, gross income including any dividends you may have received.

Avoid IRS Mistakes

Making mistakes on your state income tax return can result in penalties from the IRS. Hiring a federal income tax return preparer helps you avoid common mistakes and ensures your return gets filed accurately. A federal income tax preparer will review your return for errors and make any necessary corrections, which minimizes the chances of an IRS audit.

Whether you need assistance with federal tax refund status, adjusted gross income amount, corporate income taxes, marginal tax rates, or filing status, tax professionals will help you navigate any tax situation or business expenses.

About Hiring Federal Income Tax Return Preparer

When it comes time to file your federal income tax return, you may choose to do it yourself or use a tax professional. If you decide to use a tax preparer, there are some things you should know.

1. First, not all IRS tax preparers are equal.

Many other income tax rates and preparers include PTIN, enrolled agents, certified public accountants (CPAs), and attorneys. Each type of federal tax rate and preparer has different qualifications and experience. the best income tax preparer near you is right here!

All Paid Preparers must have a PTIN from the IRS to prepare taxes. Experience and education counts.
Enrolled agents hold licenses from the IRS and undergo thorough background checks. They specialize in taxes and assist taxpayers with various tax situations.
CPAs receive their licenses from state boards of accountancy after completing the education and experience requirements set by the Board of Accountancy. They help taxpayers address numerous financial issues, including taxes.
Attorneys obtain licenses to practice law, with some specializing in tax law while others have broader legal expertise.

2. Second, Experience equals maximum Refund

You should ask the tax preparer about their experience and qualifications. It would be best if you also asked for references from past clients about federal and state income taxes too.

Third, you should review the tax preparer’s fees before hiring them. Tax preparers typically charge by the hour, by the return, or by combining the two. Be sure to understand what services are included in the fee and what services will cost extra regarding federal tax returns.
Finally, be sure to keep good records. You must provide copies of your tax return and all related documents to the tax preparer. It is also good to keep copies of income tax brackets in your records for your reference.

When choosing a tax preparer, it is essential to do your research and ask questions. By taking these steps, you can be sure that you are hiring the best person.

FAQs

What Is A Federal Income Tax Return In The Federal Income Tax System?

A federal income tax return is the document that US citizens and residents use to report their annual income and taxes to the government. It also includes information about deductions and credits that can reduce the amount of tax owed.

Who Must File A Federal Income Tax Return?

Generally, anyone who has taxable income must file a return. There are a few exceptions, such as if your entire income or only taxable income is from Social Security benefits or you are below the standard deduction amount. But, you have to pay taxes if the income, whether individual or combined, exceeds $25,000.

What Is The Standard Deduction Amount For Taxable Income?

The standard deduction is the amount you can deduct from your income if you do not itemize your deductions. For 2024, the standard deduction is $14,600 for single taxpayers and $30,000 for married taxpayers filing jointly.

What Are The Penalties For Not Filing A Federal Income Tax Return?

The penalties for not filing a federal income tax return vary depending on how long you have been delinquent on payroll taxes. The maximum penalty is 0.5% of the unpaid taxes for each month. The penalties for filing a false federal income tax return are severe and can include imprisonment and fines.

How Can I Get Help With My Federal Income Tax Return?

If you need help preparing your federal income tax return, you can get assistance from any tax professional or accountant.

Is It Worth Going To A Tax Preparer in Akron, Ohio?

There is no definitive answer as to whether or not it is worth going to a tax preparer. Ultimately, the decision depends on various factors, including your tax situation and the complexity of your return.

That said, there are some benefits to using a professional tax preparer. For one, they can help you maximize your deductions and credits, resulting in a bigger refund or a lower tax bill. Tax preparers can also help you stay up-to-date on tax law changes and ensure your return is filed correctly.

If you decide to go with a tax preparer, it is essential to choose one who is reputable and qualified.

What Should I Expect When Working With A Tax Preparer?

When you work with a tax preparer, you can expect to provide them with basic information about yourself and your finances. This will include your Social Security number, income sources, and deductions.

It would be best if you also were prepared to answer questions about your tax return. The preparer will use this information to fill out the necessary forms and calculate your tax liability.

How Much Does It Cost To Use A Tax Preparer?

The cost of a tax credit and using a tax preparer can vary depending on the complexity of your return and the preparer’s experience with tax rates. Generally speaking, you can expect to pay anywhere from $100 to $500 for professional tax preparation services.

Get Professional Services From Akron Income Tax Co

If you are looking for professional help with your federal income tax return, Akron Income Tax Co. can assist you. We have years of experience preparing tax returns for individuals and businesses, and we can help you claim all the deductions and credits to which you are entitled. Contact us today to get started.

Accurate, Reliable and Secure.