tax_Accounting

tax_Accounting - Tax Outline Tuesday, March 20, 2007 1:48...

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Unformatted text preview: Tax Outline Tuesday, March 20, 2007 1:48 PM INDIVIDUAL INCOME TAXATION SECTION 1 Fundamentals A. Different types of tax a. Income b. Sales and Use c. Property d. Payroll e. Estate f. Excise B. Objectives of the federal income tax a. Primary b. Secondary i. Social ii. Economic C. Income Tax Model Gross Income- Deductions for Adjusted Gross Income (aka Adjustments) = Adjusted Gross Income- Standard Deduction or Itemized Deductions (whichever is greater)- Exemptions = Taxable Income x Tax Rates (or Tax Tables) = Tax Liability + Other Taxes = Total Tax- Credits and Payments = Tax Due or Refund Due SECTION 2 Gross Income What is taxable and what is not? A. Inclusions in Gross Income (Taxable items of income) a. Alimony b. Amounts recovered after being deducted in prior years c. Awards d. Bonuses e. Capital gains and losses f. Compensation for services g. Debt cancellation h. Dividends i. Employee benefits j. Gains from illegal activities k. Gambling winnings l. Hobby income m. Interest n. Partnership income (loss) o. Prizes p. Rents q. Retirement pay r. Rewards s. Royalties t. Scholarships (room and board) u. Social security benefits v. Tips w. Unemployment compensation B. Exclusions from gross income a. Child support payments b. Damages for personal injury c. Disability benefits d. Fringe benefits e. Gifts f. Health insurance proceeds g. Inheritance h. Life insurance proceeds i. Municipal bond interest j. Scholarships (tuition, books, and supplies) k. Social security benefits SECTION 3 Deductions for adjusted gross income A. IRA contributions a. Self-employed health insurance b. Keogh contributions c. Penalty on early withdrawal of savings d. Alimony payments e. Moving expenses f. Student loan interest g. Tuition and fees SECTION 4 Standard Deduction (2006 tax year) Single $5,150 Married filing Joint $10,300 Married filing Separate $5,150 Head of household $7,550 Qualifying widow(er) $10,300 Additional amounts for old age and blindness ($1,000 if MFJ; $1,250 if S) The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $850 or the sum of $300 and the individual's earned income. SECTION 5 Itemized Deductions A. Medical a. Taxes b. Interest c. Charitable contributions d. Casualty and theft losses e. Miscellaneous f. Employee business expenses g. Other B. Reduction of Deduction SECTION 6 Exemptions ($3,300 for 2006; 3,200 for 2005) A. Personal a. Dependency i. Tests: Dependent taxpayer; joint return; citizenship; relationship; age; residency; support b. Reduction of Deduction SECTION 7 Tax Rates (effective 1/1/06) Tax Rate Single MFJ_ 10% $0 - $7,550 $0 - $15,100 15% $7,551 - $30,650 $15,101 - $61,300 25% $30,651 - $74,200 $61,301 - $123,700 28% $74,201 - $154,800 $123,701 - $188,450 33% $154,801 - $336,550 $188,451 - $336,550 35% $336,551 and up $336,551 and up SECTION 8 - Miscellaneous A. Filing Status Single Married filing jointly...
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tax_Accounting - Tax Outline Tuesday, March 20, 2007 1:48...

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