Tax Planning

Gross income − above-the-line (for-AGI) deductions = AGI; AGI − greater of standard or itemized deductions − QBI deduction = taxable income; taxable income × rates − credits + other taxes = tax due.

The marginal rate is the rate applied to the next (last) dollar of taxable income; the effective (average) rate is total tax divided by total income (or taxable income).

Income is taxed in tiers — successively higher rates apply only to income within each higher bracket, so a taxpayer's marginal rate exceeds their effective rate.

Single, married filing jointly (MFJ), married filing separately (MFS), head of household (HOH), and qualifying surviving spouse.

An unmarried (or considered-unmarried) taxpayer who pays more than half the cost of keeping up a home for a qualifying person (e.g., a dependent child or relative) for more than half the year.

A penalty occurs when two earners pay more filing jointly than they would single; a bonus occurs when a single earner couple pays less jointly than as two singles.