We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byJaclyn Durden
Modified over 2 years ago
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Principles of Taxation Chapter 13 The Individual Tax Formula
Slide 13-2 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Objectives filing status computing taxable income standard deduction versus itemized deductions exemptions tax rates credits and AMT payment and filing requirements
Slide 13-3 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Filing Status - Married If married on the LAST day of the year. MFJ (married filing joint) rates If spouse incomes very similar, single rates generate lower tax If spouse incomes dissimilar, married rates generate lower tax. MFJ rates apply to Surviving Spouse widow or widower with a dependent child for 2 more years after death of spouse. MFS (married filing separately) rates are less favorable. Typically used by separated spouses.
Slide 13-4 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Filing Status - Unmarried Single is the default category for unmarried individuals (neither surviving spouse nor head of household). SeeAP1 for filing status examples.
Slide 13-5 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Taxable Income Computation Calculate total income totalling Line 22 on 1040. Calculate Adjusted Gross Income (AGI) on Line 32 of 1040. Subtract the greater of: standard deduction or itemized deductions Subtract total exemptions
Slide 13-6 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Standard Deduction Depends on filing status. For 1999: MFJ = $7200 MFS = $3600 HOH = $6350 Single = $4300 Blind or aged (>=age 65) MJF, MFS = $850 per item HOH or Single = $1050 See AP2 for standard deduction examples.
Slide 13-7 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Itemized deductions See Schedule A (Chapter 16 details) Bunching. If itemized deductions are about equal to standard deduction each year, bunch deductions on alternate years and claim standard deduction on other years. Example: My dad gives $5,000 to charity each year. He is 72 and single. What is his standard deduction each year? Does he itemize? Suppose he gave $10,000 to the church every other year?
Slide 13-8 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Exemptions Personal exemption for the taxpayer (2 for MFJ). You cannot claim yourself if someone is claiming you. Exemption = $2750 in 1999 for each personal or dependency exemption.
Slide 13-9 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Exemptions for dependents Family member OR live in your home for entire year. You provide > 1/2 financial support Dependent’s gross income < exemption amount waived for child < 19 OR student-child<24. Dependent may not generally file a joint return. Dependent must be a U.S. citizen OR a resident of US, Mex, Can See AP3 for practice with rules.
Slide 13-10 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Rich People Phase-out of itemized deductions - If AGI greater than $126,600 (MFJ) in 1999, itemized deductions are reduced by 3% of income > $126,600. Can’t reduce itemized deductions below 20% of the total. Phase-out of exemptions - IF AGI greater than $189,950 (MFJ) in 1999, reduce exemption by 2% for each $2500 that AGI is above the threshold. Can reduce to 0.
Slide 13-11 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Tax Formula Total Income - Adjustments = AGI - stand ard or itemized deductions - exemp tions = Taxabl e Income Take Tax able Income to the rate schedules at the front of the book.
Slide 13-12 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Tax computations See AP 4 and 5 for practice with tax rate schedules. What do you notice about married versus single rates? AP4 Would Ms. G and Mr. H prefer married or single? AP5 Would Mr. P and Mrs. P prefer married or single?
Slide 13-13 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Credits Child Credit = $500 per child in 1999. Phases out for rich. Dependent care credit (child < 13 years old). Credit amount between 30% and 20% of child care costs depending on income range. Earned income credit. This is refundable - a transfer payment to working poor. Increases progressivity of tax rates. Credit is higher for taxpayers with children and phases out as income increases. Excess FICA withholding is refunded through a tax return claim.
Slide 13-14 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 AMT (again!!) Same purpose - make sure rich people using “loopholes” pay some tax. Taxable income + or - adjustments + preferences = AMTI before exemption - exemption = AMTI x 26% or 28% = TMT
Slide 13-15 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Payment and Filing Requirements Taxes on wages are withheld each pay period. Estimated taxes on other income due 4/15, 5/15, 9/15 and 1/15. Pay 90% of current year tax, 100% of prior year (or 105% of prior year if 1998 AGI>$150,000). Tax return due 4/15, but may be extended to 8/15 then 10/15 (LAST DATE).
McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Principles of Taxation Chapter 13 The Individual Tax Formula.
Click to edit Master text styles Second level Third level Fourth level Fifth level #13-1 McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies,
The Individual Tax Formula
1. 2 THE INDIVIDUAL TAX FORMULA Corporate vs. individual tax model Filing status for individuals Overview of taxable income Alternative minimum tax Payment.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Taxes 101 John Barrick Chad Coons.
Taxable Income Formula for Individuals
Chapter 14 The Individual Tax Model Taxable Income Computation Taxable Income Computation Add all income from whatever source derived during the taxable.
©The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin Chapter 2 Expanded Tax Formula, Forms 1040A and 1040 and Basic Concepts “Taxes: Of life's two certainties,
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 07 Individual Income Tax Computation and Tax Credits.
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
The W-4 Form The W-4 form tells your employer the withholding rate for your pay. You must claim your filing status: single, married, or married but withhold.
Individual Income Tax Computation and Tax Credits
Copyright © 2015 by the McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution.
Chapter 14 The Individual Tax Model How to Use the Tax Rate Schedule Schedule divided into brackets—10%, 15%, 25%, 28%, 33%, 35% and 39.6% Income.
CHAPTER 1 The Individual Income Tax Return Income Tax Fundamentals 2007 edition Gerald E. Whittenburg & Martha Altus-Buller.
Tax Planning and Strategies
Individual Income Tax Overview, Exemptions, and Filing Status
GOALS BUSINESS MATH© Thomson/South-WesternLesson 2.3Slide 1 2.3Federal Income Taxes Calculate adjusted gross income and taxable income Calculate the income.
Individual Income Tax Overview
©2015, College for Financial Planning, all rights reserved. Session 3 Income Tax Calculation and Tax Credits CERTIFIED FINANCIAL PLANNER CERTIFICATION.
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 4 Lecture 3 Tax Planning and Strategies. Individual Income Tax Formula Total Income (everything received) - Exclusions/Tax-exempt Income_______________.
Tax Preparation. Federal Income Tax Structure Federal and State income taxes are progressive tax The higher your income, the greater percentage is.
CHAPTER 1 The Individual Income Tax Return Income Tax Fundamentals 2011 edition Gerald E. Whittenburg Martha Altus-Buller Student’s Copy 2011 Cengage Learning.
Tax Unit: Module 7 East Jackson High School Consumer Math Class.
Income Tax Fundamentals 2010 edition Gerald E. Whittenburg Martha Altus-Buller Student’s Copy 2010 Cengage Learning.
Copyright © 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit E, Slide 1 Managing Money 4.
Chapter 2 Determination of Tax. Learning Objectives Use the tax formula to compute an individual’s taxable income Determine the amount allowable for the.
CHAPTER 1 The Individual Income Tax Return 2013 Cengage Learning Income Tax Fundamentals 2013 Student Slides Gerald E. Whittenburg Martha Altus-Buller.
© 2008 Thomson South-Western CHAPTER 3 MANAGING YOUR TAXES.
Individual Taxation and 1040 Preparation. 2 “In this world nothing is guaranteed but death and taxes”—Benjamin Franklin.
Standard Deduction, Filing Status, Exemptions. Three Separate Topics? Why look at these topics together? They are related: The amount of the standard.
ACC 331 CHAPTER 2. INTRODUCTION BASIC KNOWLEDGE TO HELP YOU UNDERSTAND DETAILED CHAPTERS THAT FOLLOW FILING STATUS EXEMPTIONS TAX COMPUTATIONS.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Tax Preparation Financial Literacy.
Business Math 2.3 Federal Income Taxes.
McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Principles of Taxation Chapter 10 The Corporate Taxpayer.
Chapter 3 Calculate Taxable Income Personal and Dependency Exemptions
TAX VOCABULARY. ability to pay - A concept of tax fairness that states that people with different amounts of wealth or different amounts of income should.
AC256: Federal Taxation Term 1103A Seminar: Unit 2 August 14, 2011 Emil Koren, CPA, MBA.
2-1 ©2009 Pearson Education, Inc. Publishing as Prentice Hall.
Chapter 4 Tax Planning and Strategies Tax Planning and Strategies.
Copyright © 2011 Pearson Education, Inc. Managing Your Money.
Ch. 9.2 Forms and More Forms: 1040EZ and 1040A Objectives 1.To be able to choose the right form for each situation 2.Be able to fill out a form.
Chapter 3 Tax Determination; Personal and Dependency Exemptions; An Overview of Property Transactions Copyright ©2005 South-Western/Thomson Learning Eugene.
Liberty Tax Service Online Basic Income Tax Course. Lesson 6
Completing the 1040EZ 1040 EZ vs A Day 3. Read the Tax Process article In your notebook: What is the maximum income you can earn in order to complete.
Credits Reduce tax liability dollar for dollar Refundable Taxes withheld/estimated payments Earned income credit May be as high as 45% of earnings.
© 2017 SlidePlayer.com Inc. All rights reserved.