Archives

• INDIVIDUAL RETIREMENT ACCOUNT (IRA)

  Contributions to a traditional IRA are deductible from earned income in the calculation of federal and state income taxes if the taxpayer meets certain requirements. The earnings accumulate tax deferred until withdrawn, and then the entire withdrawal is taxed as ordinary income. Individuals not eligible to make deductible contributions may make nondeductible contributions, the earnings on which would be tax deferred.

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• GIFT TAXES

  A federal tax levied on the transfer of property as a gift. This tax is paid by the donor. Currently, the first $13,000 a year from a donor to each recipient is exempt from tax. Most states also impose a gift tax. The gift tax exemption is indexed for inflation.

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• FEDERAL INCOME TAX BRACKET

  The range of taxable income that is taxable at a certain rate. Currently, there are six federal income tax brackets: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent.

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