As you know, April 15 is the deadline for filing your taxes (or an extension if you just can't make it). I thought today I'd define a few terms that are confusing. First, is your "nominal bracket." Well, this always makes me think that somehow, they want me to believe the bracket is low--that it's nominal. That's not what it means. We have a series of tax rates that increase as you earn more money. Everyone begins by paying the lowest income tax rate, until they earn more money than applies to that bracket. Then, they fill the next lowest bracket. They continue this process until they run out of money in a certain bracket. This bracket is called their "nominal bracket," and it's the highest bracket the person pays. Any additional dollar they earn will be taxed at this bracket, until eventually they might move to an even higher bracket. As a result, if you take your income and multiply it by your nominal bracket, you will get a tax liability much higher than you actually owe. The tax tables and income levels are available on irs.gov. (If I reproduced them here, you would all fall asleep!) We'll cover more terms tomorrow.
Be Prosperous!
Peggy
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