However, income is not considered to be constructively received if the taxpayer s control over its receipt is subject to substantial limitations or restrictions. Thus, for example, the owner of a life insurance policy who chooses not to physically accept interest earned on policy dividends during the taxable year will still be deemed to have constructively received the interest that year because the taxpayer is in control of when the money will be received. The doctrine of constructive receipt determines when income is taxable. Income levels subject to these brackets vary according to the taxpayer s filing status. All the tax brackets are subject to indexing for inflation.
Individual taxpayers are generally subject to lower tax rates on long-term capital gains.
Capital gains will be discussed in more detail in assignment 10. For children with no earned income, this specified amount is equal to the child s standard deduction plus an additional amount that is indexed for inflation. Amounts in excess of this total, referred to as net unearned income , will be taxed at the parents marginal rate. Under the current rate system, in many instances a married couple filing jointly will pay more in income taxes than they would if they filed as two single taxpayers. Whether filing jointly creates a marriage penalty depends upon the relative income levels of the two spouses.