In the context of federal income tax, the Internal Revenue Service (IRS) has organized tax values in terms of schedules or tables. Tax schedule or table helps the citizens determine the value of the tax incurred for a certain year. The federal tax schedule is constructed in accordance to the Internal Revenue Code of 1986. There are four types of tax rate schedules and these are based on the filing status of taxpayer. Each type corresponds to a schedule name. These four types are: single (Schedule X), married filing jointly or qualifying widow or widower (Schedule Y-1), married filing separately (Schedule Y-2) and the head of household (Schedule Z). Each schedule is divided into 3 columns; the first and second columns denote the income range while the third column denotes the value of tax to be paid.
Here is the 2004 Federal Income Tax Schedule (based on IRS):
Schedule X (Single)
Lowest ValueHighest ValueTax Rate$0$7,15010.0%$7,151$29,05015.0%$29,051$70,35025.0%$70,351$146,75028.0%$146,751 $319,10033.0%$319,101Above35.0%
Schedule Y-1 (Married filing jointly or qualified widow or widower)
Lowest ValueHighest ValueTax Rate$0$14,30010.0%$14,301$58,10015.0%$58,101$117,25025.0%$117,251$178,65028.0%$178,651 $319,10033.0%$319,101above35.0%
Schedule Y-2 (Married filing separately)
Lowest ValueHighest ValueTax Rate$0$7,15010.0%$7,150$29,05015.0%$29,051$58,62525.0%$58,626$89,32528.0%$89,326$159,55033.0%$159,551above35.0%
Schedule Z (Head of Household)
Lowest ValueHighest ValueTax Rate$0$10,20010.0%$10,201$38,90015.0%$38,901$100,50025.0%$100,501 $162,70028.0%$162,701 $319,10033.0%$319,101 above35.0%
It is a must to know the filing status of the taxpayer to make the tax schedule effective. After determining the filing status, the taxpayer must check the taxable income for the year and find the range where the income belongs. For example, a taxpayer belongs to the single filing status and has an income of $50,000. The proper table to be used is Schedule X since this table is for single status filers. The taxpayer will be on the income range of $29,051 to $70,350; this pertains to a tax rate of 25.0%. The calculation goes like this: for each bracket that you have skipped, you will have to deduct the highest with the lowest amount and multiply it by the tax rate for that range and the answer for each bracket will be added up including the taxable amount minus the lowest value of the income for the taxpayer's bracket. In the case of our example; $7,150 will be subtracted by $0 then the difference will be multiplied by 0.10. For the next bracket, $29,050 will be subtracted by $7,151 then the difference will be multiplied by 0.15. For the next bracket, we have the value of the income, $50, 000, will be subtracted by $29,051 then the difference will be multiplied by 0.25. The answers for the three brackets will be added up and the sum will be $9,237.1 and that is the value of tax that will be paid.