How Do I Figure Out My Tax Bracket if I Am Retired & Without Any Income?
Original post by Beth Winston of Demand Media
It's important to figure out what your legal obligations are in the eyes of the Internal Revenue Service (IRS). In some circumstances, if your income is low or non-existent, you may not even have to file a tax return. But make sure you aren't missing out on any credits or tax refunds.
The IRS publishes a table of tax brackets for each tax year, showing what the marginal tax rates are for different levels of income. As of the time of publication, the lowest tax rate, applied if your income is between $0 and $8,500 for a single person, is 10 percent.
You may believe you have no income, but to make sure, you must understand what the IRS defines as taxable income. Taxable income includes both earned income and unearned income. Earned income is wages, tips, commissions and bonuses, as well as unemployment benefits and sick pay. Unearned income includes interest and dividends, alimony payments, capital gains, rents, royalties and gambling winnings.
If you find by this calculation that you actually do have some income for the tax year, the next step is to apply deductions, credits and exemptions. You get to exclude a certain amount of your gross income from consideration by the IRS. You can either take the standard deduction if your situation is simple, or you can choose to itemize your deductions if you have a range of deductible expenses. As of the time of publication, the standard deduction for a single person is $5,800, or $8,500 for a head of household.
Determining Whether to File
If your income minus deductions comes to zero, you may not need to file a tax return. However, you may find it is in your own interest to file. The IRS provides a good guide to who needs to file in different situations. Even if you do not have sufficient taxable income, you should file if you sold your home, if you owe tax on a qualified retirement plan, or if you had self-employed earnings of more than $400.
About the Author
Beth Winston is a journalist and writer with more than 15 years experience. She began her career working for the British Broadcasting Corporation and has worked for several news outlets in both the U.K. and U.S. Winston holds a Postgraduate Diploma in broadcast journalism from Bristol Polytechnic.