CHAPTER 7 student F 2010

CHAPTER 7 student F 2010 - CHAPTER 7 INCOME TAX COMPUTATION...

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CHAPTER 7 INCOME TAX COMPUTATION & TAX CREDITS
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Filing Requirements/Individuals General Rule: Tax return must be filed if gross income is ≥ the sum of the standard deduction and exemption amount Due on or before the 15th day of the 4th month after taxpayer’s year end 6 month extension of time to file Exception for Self-employed: SE earnings ≥ $400
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Penalties Underpayment penalty Safe-harbor requirements 90% of current tax liability or 100% of previous year’s tax liability (110% with higher AGI > $150,000) – 25% at each estimated filing deadline Late filing penalty 5% of tax owed per month up to 25% if not fraudulent; 15% of tax owed per month up to 75% if fraudulent No penalty if no tax is due Late payment penalty If don’t pay entire tax owed by due date of return .5% of amount due up to 25% maximum if not fraudulent 15% of amount due per month up to 75% if fraudulent
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Tax Formula Tax on taxable income (see Tax Tables or Tax Rate Schedules) $ x,xxx Preferential tax items Kiddie tax Alternative Minimum Tax xx Tax before Credits x,xxx
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Tax Formula Tax before credits $ x,xxx Less: Tax credits Foreign tax credit <xx> Child & dependent care credit <xx> Education credits <xx> Child tax credits <xx> Other credits <xx> Tax after credits x,xxx
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Tax Formula Tax after credits $ x,xxx Add: Other Taxes Self-employment tax xx Other taxes xx Total taxes x,xxx
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Tax Formula Total Tax x,xxx Less: Payments Withholding < xx> Estimated Payments < xx> Making work pay < xx> Earned Income Credit < xx> Refundable education credit < xx> Homebuyers credit < xx> Excess Social Security payments < xx> Other Credits < xx> Amount due or Refund x,xxx
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Exceptions to Ordinary Tax Rates Long-term capital gains (net capital gains) Generally 15% but can be as high as 28% or as low as 0% Two different tax rates on one gain is possible
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CHAPTER 7 student F 2010 - CHAPTER 7 INCOME TAX COMPUTATION...

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