Comments on: Federal income tax brackets

by: Tom Adams

Mon, 19 Oct 2009 16:20:16 +0000

Linda - if they have no other income than the Savings Bond interest, it depends on how much interest they earned. For the 15-year-old, but not the 18-year-old, you might have to add the income to your own tax return if it amounts to a lot of money. See tax law change impacts kiddie tax for more information.

Tom Adams

by: Linda Quercia

Fri, 16 Oct 2009 16:24:08 +0000

Tom,
I just cashed several EE and I bonds for my two children, ages 18 and 15. The bonds were all in their names and with their social security numbers. I divided the money evenly and deposited each amount into their individual savings accounts. They are both still in high school and do not have jobs. Will they or I still have to pay the taxes on these cashed bonds?

by: Tom Adams

Tue, 06 Oct 2009 14:09:39 +0000

John - Yes - you have a one-time get out of tax free card. Whenever your rates are low it's a good time to roll over your investments and pay the tax.

You might also qualify for the Savings Bond education deduction. Check it out.

Tom Adams

by: John

Tue, 06 Oct 2009 02:44:17 +0000

I have $25000 worth of EE bonds from the 80's and just went back to grad school. While I dont need the money, it seems to me it would make sense to cash them all now while I'm making nothing, rather than cash them in a few years when I'll be working…… due to the tax brackets described in this article. Saving 10% Fed taxes on 20-27 yrs worth of interest seems much more important than State tax exemption over the few remaining years. Does this sound reasonable??

by: Tom Adams

Fri, 01 May 2009 14:29:24 +0000

Patty - if you were still living together you couldn't both be heads of the household. You'd have to have two households. Also, something is off in the way you calculated the taxes. Here's how to calculate it, with the understanding that tax rates are based on your taxable income, which is less than your total income but varies from family to family. So what someone actually paid would be less than these examples: If you're married, the bill comes to:

$1,670 (10% on the first $16,700)
$7,680 (15% on the next $51,200)
$5,775 (25% on the next $23,100)
-------
$15,125 Total

In your example where you're each head of a household:

$1,195 (10% on the first $11,950)
$5,033 (15% on the next $33,550)
-------
$6,228 Each
-------
$12,455 Total

So you'd save $2,670 on taxes, but you'd have to set up two households. Tom Adams

by: Patty

Thu, 30 Apr 2009 18:09:01 +0000

Let me make sure I understand this. My husband and I will make $45,500 each ($91,000 combined) in 2009. So our federal tax bill will equal $18,777 or $9388 each. But if we get divorced (still living together) each claim one of our two kids so that we both can file as "single head of household", then our total tax bill would be $10,064 or $5032 each. We can save a total of $8713 each year just by getting divorced??