What are Tax Brackets? - Tax brackets are divisions in the rate of tax payable based on an individual’s income. For instance the person with low income is able to pay less tax than the one whose income is much higher.
Every year, the government has to collect money from its
citizen through tax. This is simply meant to collect funds required for running
the country and engaging in projects such as funding government institutions,
paying civil servants and funding government projects.
This money is collected through tax which is usually a small percentage of a
person’s earnings based on their sources of income and the amount of money they
make in a certain period of time which could either be monthly or yearly.
Tax brackets are divisions in the rate of tax payable based on an
individual’s income. For instance the person with low income is able to pay less
tax than the one whose income is much higher. This difference helps in ensuring
that every individual is able to pay tax and still have money left for their
personal use to fulfill all other financial obligations.
Tax brackets are simply the government’s way of ensuring fairness in the rate
at which it taxes its citizen. Tax brackets differ from year to year in order to
accommodate the different economic situations which are brought about by the
rate of inflation.
With the increase of inflation, tax brackets 2011 had to be changed
accordingly due to the falling value of the dollar. This ensures that the
government too can still be able to maintain the running of its operations and
institutions effectively.
Because taxable incomes have been carefully divided into groups as seen in
the tax bracket 2011 it ensures that tax is charged to all citizens in a manner
that is fair and financially sound depending on the bracket different
individuals appear in. For instance, it wouldn’t make sense to tax a person with
a small income as you would tax a person with a large income since the person
with the low income will go home with nothing to fulfill his financial
responsibilities.
However, this is not usually the case for all individuals earning the same
income. For instance considerations have been made in the tax brackets 2011 to
cater for the needs of those tax payers who have added responsibilities as
compared to other tax payers in the same brackets.
Such individuals are entitled to certain exemptions in the tax brackets 2011
since they have more financial responsibilities than the average citizen. These
exemptions consider factors such as the number dependants taxpayer has, or if
they are the happen to be the sole bread winners in their entire household.
When filing tax returns apart from tax brackets 2011, you should equally have
proper knowledge of the various exemptions you are entitled to base on your
nature of income generating activities.
It is also advisable to gather proper knowledge on all matters concerning
taxes early enough before the tax filling season begins to avoid making
mistakes. Find out how you can take advantage of the exemptions being offered in
the case where you have many dependants or are the sole bread winners of your
household.
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