Preschool teachers are subject to federal income tax on their earnings. The federal income tax brackets for 2022 are as follows:
* 10% bracket: Up to $10,275
* 12% bracket: $10,275 - $41,775
* 22% bracket: $41,775 - $89,075
* 24% bracket: $89,075 - $170,500
* 32% bracket: $170,500 - $215,950
* 35% bracket: $215,950 - $539,900
* 37% bracket: Over $539,900
Preschool teachers can use the following tax deductions and credits to reduce their federal income tax liability:
* Standard deduction: The standard deduction for single taxpayers is $12,950 for 2022. The standard deduction for married couples filing jointly is $25,900.
* Personal exemption: The personal exemption is no longer available for 2022.
* Child tax credit: The child tax credit is a refundable tax credit of up to $2,000 per child under the age of 17.
* Dependent care credit: The dependent care credit is a refundable tax credit of up to $1,050 for expenses paid for the care of a child under the age of 13.
* Earned income tax credit (EITC): The EITC is a refundable tax credit for low-income workers. The maximum EITC for 2022 is $6,935 for taxpayers with three or more qualifying children.
State and Local Income Tax
Preschool teachers may also be subject to state and local income tax. The state and local income tax rates vary from jurisdiction to jurisdiction. Preschool teachers should consult with their state and local tax authorities to determine their applicable tax rates.
Self-Employment Tax
Preschool teachers who are self-employed are subject to self-employment tax. The self-employment tax rate is 15.3% for 2022. Self-employed preschool teachers can deduct the following expenses from their self-employment income to reduce their self-employment tax liability:
* Business expenses, such as advertising, marketing, and travel expenses
* Health insurance premiums
* Retirement plan contributions
* Social security and Medicare taxes