what is the minimum income to file taxes by joshgill

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									Frequently Asked Questions about Federal income taxes
Do I need to file a federal tax return?
What is my personal exemption?
What is the standard deduction?
What is my tax bracket?
How much can I deduct for mileage?
How much can I contribute to my retirement plan?

Do I need to file a federal tax return?
To taxpayers who have faithfully filed tax returns for years, it may be surprising to find that they may not
have to file. Generally, you do not need to file a tax return if your income is under these amounts:

               Filing Status
                                                         Under age 65 65 or older

               Single                                          $8,750        $10,050

               Head of Household                              $11,250        $12,550

               Married filing jointly                         $17,500        $20,100

               Married filing separately                            $0             $0

               Widow(er) with qualifying dependent            $17,500        $18,800

However... you must file a return if you had self-employment income of $400 or more.

Or, you should file if someone else (like your parents) could claim you as a dependent and you earned over
$800 or had investment income (interest on savings, stock dividends, etc.) of more than $250.

Also, you should file a return even if your income is under these limits if you:

        Had withholding on wages, pensions, retirement distributions or investment accounts.
        Are eligible for an earned income credit.

Personal exemptions
Personal exemptions for 2007 are $3,400 per person. You are entitled to claim one exemption apiece for
yourself, your spouse if married, and each dependent you can claim. If someone else (such as your parent)
claims you as a dependent, you cannot take an exemption for yourself.
Standard deductions
The IRS excludes from your taxable income a specified amount of expenses, called a "standard deduction."
If your actual expenses in the allowed categories total more than the standard deduction amount, you may
deduct those actual expenses, which is called "itemizing." If your itemized deductions are less than the
standard amount, you are better off to use the standard deduction.

                        Filing Status                            Federal   Over 65

                        Single                                   $5,350    $6,650

                        Head of Household                        $7,850    $9,150

                        Married filing jointly                   $10,700 $13,300

                        Married filing separately                $5,350* $6,650*

                        Widow(er) with qualifying dependent $10,700 $12,000

         * Only if spouse does not itemize; otherwise $0

Tax brackets

Income tax is based on your income after personal exemptions, standard or itemized deductions, and other
adjustments are subtracted. A tax bracket is the rate at which the top of your income is taxed, but not all of
it. Someone in a 28 percent tax bracket has part of their income taxed at 10 percent and part at 25 percent,
with only the highest portion at 28 percent. The tax bracket tells you how much you will have to pay in
federal income tax on each additional dollar you make.
        Federal                               Single            HOH         MFJ or QW              MFS
        Tax bracket
                                                                 For income over...

        10%                                                $0         $0                  $0               $0

        15%                                         $7,825       $11,200              $15,650          $7,825

        25%                                       $31,850        $42,650              $63,700        $31,850

        28%                                       $77,100       $110,100            $128,500         $64,250

        33%                                      $164,850       $178,350            $195,850         $97,925

        35%                                      $349,700       $349,700            $349,700        $174,850

                    The federal Form 1040 actually collects several other taxes including:

                              Self employment (Social Security and Medicare) tax
                              Social Security and Medicare tax on tip income
                              Early withdrawal tax on IRA's and retirement plans
                              Household employee payroll tax ("nanny tax")
                              Alternative minimum tax

Mileage rates
Standard mileage rates may be used as an alternative to deducting actual expenses. The standard mileage
rate must be claimed the first year a vehicle is used for deductible purposes; you cannot change to it once
you have started claiming actual expenses. To deduct either mileage or actual expenses, you must have a
written record for each trip showing:

                              Date                    Use         Rate - 2007
                              Miles driven
                              Where to                Business    48.5 ¢
                              Business purpose
                                                       Medical     20 ¢
                                                       Moving      20 ¢
                                                       Charitable 14 ¢

Retirement plan limits
Taxpayers age 50 and older may contribute a higher amount to retirement plans to "catch up," regardless of
whether or they had contributed the maximum amounts earlier in life.

             IRA & Roth                 401(k) & 403(b)             SIMPLE                           SEP
                                                                                       25% of compensation
       Under age 50 Catchup Under age 50 Catchup Under age 50 Catchup
2006           4,000       5,000           15,000   20,000         10,000     12,500             $44,000
2007           4,000       5,000           15,500   20,500         10,000     13,000             $45,000

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