Are Your New 2011 Federal Tax Brackets Confusing You

Quick: What's your 2011 Federal Tax Brackets? Even if you know it

, the concept is pretty puzzling. And worse, many taxpayers do not understand the magnitude, or in certain situations, the lack of consequence of tax brackets. On one hand, tax brackets overstate taxes, yet on the other hand they play down taxes. Tax Attorney Anthony E. Parent of Parent & Parent LLP, the IRSmedic, breaks down the bewilderment and shares critical information to help a taxpayer reduce taxes and avoid IRS problems.

What is astonishing to a good number Individuals to realize is that Federal Income Tax is less than a hundred years old. Congress was not given this control to tax income originally, but that did not stop Congress from trying. Congress assessed the first income tax brackets however it was held to be unauthorized. The income tax was sold by "progressives" to remove all social ills (perhaps including syphillis and pinball).

The Progresives, through witty campaigning ultimately won over a cynical public that the sixteenth Amendment was essential for the country to succeed. Most of the public believed the income tax would only affect 2 percent of the nation's citizens and would never be assessed on the vast majority.

Almost one hundred years has passed since the Revenue Act of 1913 and we have seen 2011 Federal Tax Brackets rise and fall. Nevertheless, one thing is true: the promise of only taxing the wealthy has been rapidly disregarded. There are numerous other tax on income the IRS collects, not just income taxes and those are imposed on all income earners.

The IRS also extracts employment and self-employment taxes which virtually affect all income earners. Half of what the IRS collects is employment taxes. Tax brackets are completely silent to employment and self employment taxes.

For individual taxpayers, the tax rates are 10%, 15%, 25%, 28%, 33% and 35%. Which rate a taxpayer falls in just does not rely on income, but also tax filing status. These employment taxes are not anywhere to be found in these tax bracket rates. This omission is incredible.

And for some types of income, the tax brackets don't apply at all. Income resulting from passive income, long-term capital gains and dividends are taxed at rates totally different than the tax bracket rate. And for these kinds of income, the supplementary employment and self employment taxes aren't assessed either.

Also, many higher income earners are subject to the AMT. To further complicate issues, the Alternative Mimimum tax brackets could be relevant. The Alternative Minimum Tax has completely dissimilar tax brackets. Those tax rates are 26 or 28%. The Alternative Minimum Tax brackets are either 26 or 28%. Even though those tax rates are lesser than the normal tax brackets, the effective tax rates can be higher as because with the AMT, the IRS denies several write-offs. Important write-offs like local and state tax write-offs.

Taxpayers should give more awareness to their effective tax rate, rather than the tax rate the 2011 Federal Tax Brackets say they will be paying.It is impossible to guess taxes due based on unadjusted income.

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