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It looks like I am just $200 over the tax bracket for the 15% tax rate (I have $40,000 in taxable income). Is there anything I can do to quickly take me back? I am a teacher and a single mother of two teenage kids, with no support whatsoever, so it is quite a loss for me.
There's good news for you: The tax brackets are actually a tiered system, which means that only the amount of money above each cutoff is taxed at the higher rate. For people filing as head of household in 2005, for example, the first $10,450 in taxable income is taxed at 10%, then money earned from $10,450 to $39,800 is taxed at 15%, and anything you earn from $39,800 to $102,800 is taxed at the 25% rate.
So if you do have $40,000 in taxable income, you'll only pay the 25% tax rate for the $200 above the $39,800 limit (adding only $50 to your tax bill), and the rest of your money will be taxed at the 10% and 15% rate.
And keep in mind that only applies to taxable income -- you'll be able to subtract exemptions and deductions to reduce your taxable income, and claim credits to cut your total tax bill. You'll probably qualify for $2,000 in child credits, plus various other credits and deductions, and as a teacher you can also deduct up to $250 you paid yourself for classroom supplies, whether or not you itemize.
For a list of all tax brackets for 2005, see the IRS 2005 Tax Rate Schedules. For some ideas about frequently overlooked deductions and other tax information, see the Kiplinger.com tax page.
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