Federal Income Tax: What It Is, How It Works, and What You'll Pay for 2021

With the beginning of 2022 comes the beginning of the new tax season, as well as the time to calculate federal income tax liabilities on all sources of income, like a job, investments, a business, or retirement funds.

Partner Jim Daniels explains taxable income is divided into applicable brackets working up from zero, and the rate is applied to the income that falls within the range of each bracket to arrive at the total tax. As a secondary complication, the tax rate also depends on the filer's status and changes if they are married, a head of household, or single.

Calculations are also different between individuals and businesses. While there are seven tax brackets for individual income for 2021, corporate income is subject to a flat 21% tax rate, Daniels noted.

Read the full article published by Business Insider.