2004 Individual Income Taxes 
Federal - Form 1040
 

In determining your tax burden, it's necessary to know what tax bracket you are in.  Following are the federal tax rate schedules for 2004 for each of the filing statuses.  The amounts are Taxable Income, which is after subtracting deductions and exemptions.  Each bracket is taxed at its separate rate and the total tax is the sum of the taxes on each bracket.  When analyzing the tax hit for additional income, you would use your top marginal rate.  Unlike the other kinds of taxes, these are all adjusted each year to keep pace with inflation and prevent what's called "bracket creep," where taxpayers are pushed into a higher bracket just by receiving cost of living raises.

2004 Personal Exemptions

$3,100 per person and dependent

These are phased out for the evil rich, which for this issue is defined as adjusted gross income (AGI) of over:
 $107,025 for Married Filing Separately
 $142,700 for Single
 $178,350 for Head of Household
 $214,050 for Married Filing Jointly

2004 Standard Deductions

    Single: $4,850 + $1,200 if over 64 and/or blind

    Married Filing Jointly: $9,700 + $950 each if over 64 and/or blind

    Married Filing Separately: $4,850 + $950 if over 64 and/or blind

    Head of Household: $7,150 +$1,200 if over 64 and/or blind

Itemized Deductions are phased out for the evil rich, which for this issue is defined as adjusted gross income (AGI) of over:
 $  71,350 for Married Filing Separately
 $142,700 for Single
 $142,700 for Head of Household
 $142,700 for Married Filing Jointly

Ordinary Income Tax Rates

Married Filing Jointly

Single

Head of Household

Married Filing Separately

Married Filing Jointly

Single

Head of Household

Married Filing Separately

Capital Gains Tax Rates

Gains from sales of assets owned less than or equal to one year are taxed as ordinary income.

Depreciation recapture (Section 1250 gain) is subject to a Federal income tax of 25%.

Gains from sales of assets that have been owned for more than twelve months are taxed at special lower rates.  They are based on the rates which would apply if they were ordinary income. 

Income that would otherwise be in the 10% or 15% brackets:  5%

Income that would otherwise be in the 25% or higher brackets:  15% 

Dividend Income

Income that would otherwise be in the 10% or 15% brackets:  5%

Income that would otherwise be in the 25% or higher brackets:  15% 

Updated Tuesday January 06, 2004 10:53:22 AM
Ozarks Time by KMK

Kerry M. Kerstetter
MBA~CPA~ATP~ATA
11802 Deer Road
Harrison, AR  72601
E-Mail: KMKCPA@TaxGuru.org
Web: www.TaxGuru.org
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