A405 EX CS - CH 3 6 Tax Determination Personal and...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CH 3 & 6: Tax Determination; Personal and Dependency Exemptions -Tax Formula : Income (Broadly Conceived) – Less: Exclusions = Gross Income – Less: Deductions for AGI = AGI – Less: The greater of total I.D. or the S.D. – Less: Personal and dependency exemptions * exemptions allowance = Taxable Income + Tax on T.I. – Less: Tax Credits (including Income taxes withheld and prepaid) = Tax due (or refund) - Income (Broadly Conceived) : Does not include a return of capital or receipt of borrowed funds. Exclusions: Accident insurance proceeds, Annuities (cost element), Bequests, Child support payments, Cost-of-living allowance (for military), Damages for personal injury or sickness, Gifts received, Group term life insurance, premium paid by employer (for coverage up to $50,000), Inheritances, Interest from State and Local (i.e., municipal) bonds, Life insurance paid on death, Meals and lodging (if furnished for employer’s convenience), Military allowances, Minister’s dwelling rental value allowance, Railroad retirement benefits (to a limited extent), Scholarship grants (to a limited extent), Social Security benefits (to a limited extent), Veterans’ benefits, Welfare payments, Worker’s compensation benefits. Gross Income : Does NOT include Unrealized Gains. GI INCLUDES: Alimony, Annuities (Income elements), Awards, Back Pay, Bargain purchase from employer, Bonuses, Breach of contract damages, Business Income, Clergy fees, Commissions, Compensation for services, Death benefits, Debts forgiven, Director’s Fees, Dividends, Embezzled funds, Employee awards (in certain cases), Employee benefits (except certain fringe benefits), Estate and trust income, Farm Income, Fees, Gains from illegal activities, Gains from sale of property, Gambling winnings, Group term life insurance, premium paid by employer (for coverage over $50,000), Hobby income, Interest, Jury Duty Fees, Living quarters, meals (unless furnished for employer’s convenience), Mileage allowance, Military pay (unless combat pay), Notary fees, Partnership income, Pensions, Prizes, Professional fees, Punitive damages, Rents, Rewards, Royalties, Salaries, Severance Pay, Strike and lockout benefits, Supplemental unemployment benefits,tips and gratuities, Travel allowance (in certain cases), Treasure Trove (found property), Wages - Deductions FOR AGI (above-the-line/page 1) (S. 62) because on tax return they are taken before the “line” designating AGI. D. For AGI INCLUDES: Business expenses as owner, ½ of self-employment tax paid by SE employer, unreimbursed moving expenses, Contribution to tradition Individual Retirement Accounts (IRAs) and certain other retirement plans, College tuition fees and related expenses under S. 222, Contribution to Health Savings Accounts (HSAs), Penalty for early withdrawal from savings, Student Loan interests, Excess capital losses, Alimony Payments, Expenses incurred by a taxpayer in connection with the performance of services as an employee if the expenses are reimbursed and other
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/16/2009 for the course ACCTG 405 taught by Professor Enis during the Spring '08 term at Penn State.

Page1 / 3

A405 EX CS - CH 3 6 Tax Determination Personal and...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online