Outline for Final

Outline for Final - Gross Income Deductions from Gross...

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Gross Income – Deductions from Gross Income (Generally these are business expenses) = A.G.I. A.G.I. – Standard Deductions – Itemized Deductions (Generally Personal Expenses) – Personal and Dependency Exemptions = Taxable Income Taxable Income is the amount that you will pay tax on. Taxable Income Compute Tax + Additional Taxes – Tax Credits = Net Tax (compare to) Tax Prepayments Estimated Tax 1. The law requires that a taxpayer pay at least 90% of the current year tax due, on an equal quarterly basis, by the due date of the return. 2. If the taxpayer pays less than 90% they will be penalized for the under- estimation. 3. Safe Harbor – if the taxpayer pays 100% of previous year’s tax-no penalty. 4. Safe Harbor Exception – if the taxpayer’s A.G.I. exceeds $150,000 they must pay 110% of the previous year’s tax (every quarter) 5. If your tax is higher than your tax prepayments at the end of the year you will have a balance due. 6. If your tax prepayments exceed your net tax at the end of the year you will get a refund. Who Must File a Return to determine who has to file you must know the following 1. Generally filing requirement is based on the amount of Gross Income 2. A taxpayer must file if their gross income equals or exceeds the total of: Personal exemption plus Standard deduction including the Additional Standard Deduction
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Personal Exemption 3,400 – anyone who can be claimed as a dependent on another person’s return is not entitled to a personal exemption when they file their
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This note was uploaded on 04/17/2008 for the course ACCT 143 taught by Professor ? during the Fall '07 term at Hofstra University.

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Outline for Final - Gross Income Deductions from Gross...

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