Explore U.S. Taxation for Individuals – Key filing statuses, tax rate schedules, income brackets, deductions, and more for the 2022 tax year. Don’t miss the April 18, 2023 deadline.
US tax return filing due date for calendar year 2022 i.e. 18th April 2023 is around the corner.
In this article, we shall discuss the important points to consider while computing the income & filing the federal tax return.
As the first step, an individual should consider his filing status. Under US tax laws, different filing status has been provided to the individual. Individual need to evaluate the status as per their applicability. Different tax rates have been provided under each status.
There are 5 filing status that can be opted by individual on the basis of the applicability under US tax laws:
Tax rate schedules
There are seven brackets (10%, 12%, 22%, 24%,32%, 35% and 37%) applicable to each filling status. To compute the tax, the taxpayer must choose from one of the following schedules, which are applicable to him/her.
(1). Qualifying widow(er) with dependent child
(2). Unmarried head of household
(3). Single individual
(4). Married individual filing joint return.
(5). Married filing separately
(1) Qualifying widow(er)s with dependent child (surviving spouse) may use the joint return rate schedule for the two tax years following the year in which the death of the husband or wife occurred if the following conditions are met:
1) The surviving spouse must be unmarried.
2) The surviving spouse must maintain a home as the household of a dependent son or daughter for the entire year.
3) The surviving spouse must have been entitled to file a joint return with the decedent in the deceased’s final tax year.
(2) Head of household (HOH) is available to a taxpayer who meets the following requirements:
1) Unmarried individual, other than a non-resident alien or one who qualifies as a qualifying widow(er) with dependent child
2) Maintains his or her home as the principal place of abode for one or more of the persons described as follows:
a) A “qualifying child”
(i). However, a “qualifying child” who is married must meet the dependency tests of a relative.
(ii). Other children who do not meet the definition of a “qualifying child” (e.g., a child age 25) must also meet the dependency tests of a relative.
b) A relative who qualifies as a dependent other than through a multiple support agreement.
Exception: Dependent parents need not live with the taxpayer as long as the taxpayer maintains their household.
(3) Married individual filing separate return & Married filing separately– A married individual can opt for filing the return jointly with the spouse or separately filing by both the individuals, whichever is beneficial to the taxpayer.
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FEDERAL INCOME TAX BRACKET FOR CALENDER YEAR 2022 |
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| Single | Married Filing Jointly | Married Filing Separately | Head of Household | |
| 10% | $0 – $10,275 | $0 – $20,550 | $0 – $10,275 | $0 – $14,650 |
| 12% | $10,276 – $41,775 | $20,551 – $83,550 | $10,276 – $41,775 | $14,651 – $55,900 |
| 22% | $41,776 – $89,075 | $83,551 – $178,150 | $41,776 – $89,075 | $55,901 – $89,050 |
| 24% | $89,076 – $170,050 | $178,151 – $340,100 | $89,076 – $170,050 | $89,051 – $170,050 |
| 32% | $170,051 – $215,950 | $340,101 – $431,900 | $170,051 – $215,950 | $170,051 – $215,950 |
| 35% | $215,951 – $539,900 | $431,901 – $647,850 | $215,951 – $323,925 | $215,951 – $539,900 |
| 37% | $539,901+ | $647,851+ | $323,926+ | $539,901+ |
Gross Income
Some of the items of income are as follows: (this is an indicative list only)
- Ailmony received (pre-2018 divorce decree)
- Annuities
- Dividends
- Stock
- Cash
- Property
- Employee Benefit Programs
- Employer-paid adoption expenses
- Foreign earned income
- Gambling winnings
- Interest
- Gain on sale of residence
- Capital gains
- Rental income
- Unemployment benefits
- Social security/ railroad retirement
- Workers Compensation
- Prizes and awards
- Damages received for physical injury
- Recoveries
- Group-term life insurance
- Scholarships
- W-2 wages
Gross Income- Deduction = Adjusted Gross Income
Some of the deductions are as follows:
- Alimony Payments (pre-2018 divorce decree)
- Business expenses (schedule C)
- Expenses of producing rent and royalty
- Income (Schedule E)
- Capital loss deduction (Schedule D)
- Contributions to retirement plans (self –employed SEP, SIMPLE, Keogh IRA, 401(k))
- Student loan interest
- Qualified higher education expenses
- Health Savings Account
- Up to $300 ($600 for married filling joint filers) of cash contributions to qualified charities (non-itemizers only)
- 50% of self-employment tax
- Self- employed health insurance premiums
- Interest forfeited to bank on premature withdrawals
Adjusted Gross Income – Greater of: Itemized Deduction/ Standard Deductions = Taxable Income
ITEMIZED DEDUCTIONS include:
- Taxes (state and local with limit of $10,000)
- Interest expense
- Medical expenses
- Contributions
- Unrecovered Investment in pension
- Impairment-related work expenses of a handicapped person
STANDARD DEDUCTION
For single taxpayer, standard deduction will be $12,950 and for Married couples filing jointly, standard deduction shall be $25,900.
Standard deduction for head of household shall be $19,400.
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About the Author: Author is CA Vidhu Duggal helping in advisory on domestic & International taxation issues. She is also founder of Vidhu Duggal & Company. Chartered Accountants, a Chartered Accountancy firm with its head office at New Delhi and can be reached at vidhuduggal94@gmail.com or+91-9268747482.
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