PFP1300 - MANAGING YOUR TAXES Announcements u Welcomeback...

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MANAGING YOUR TAXES
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Announcements u Welcome back How was your break? u Auto group projects are due on  Wednesday in class (at the beginning of  class).
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Principles of Federal Income Taxes u Typical American family pays about a  third  of  its gross income in various types of taxes. u Internal Revenue Service (IRS)  is responsible  for the administration and enforcement of  federal tax laws.
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Income tax is the single largest annual expenditure for most households. Stanley & Dankos
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Don’t believe me? u You must pay on your income:  federal income tax,  state income tax (possibly),  municipal income tax (possibly),  city income tax (possibly),  social security tax (OASDI),  and medicare.   u Then you must pay on your purchases: sales taxes,  property taxes, luxury taxes,  investment taxes (capital gains tax), estate taxes,  inheritance taxes,  and so many more….
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Tax Freedom Day u Figure 1: Tax Freedom Day, 1963 – 2004 u Source:  Tax Freedom Day® Arrives April 11 in 2004, Earliest Since 1967, Tax Foundation, Washington,  D.C., April 7, 2004http://taxfoundation.org/taxfreedomday.html.
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Tax Recommendations for Soon to be Graduating Students u 1.   Be organized with your record keeping Have a folder that you put all your tax receipts  into for tax time An electronic systems such as Quicken or  Money make this really easy, if you use them u 2.  Keep prior year’s return Use it as an example of past deductions,  and keep it for 7 years
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Tax Recommendations u 3.  Go through checkbook/credit card  statements and remember: Keep good records so you can itemize  deductions Get good at showing what non-cash  charitable contributions you make, such as  miles you travel for religious or community  related activities. 
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Tax Recommendations u 4. Spend time in December calculating  capital gains, and offset them if possible  with capital losses Remember you can offset capital gains with  losses, and can deduct up to $3,000 per year  in capital losses (every little bit helps) u 5. Pay charities with appreciated stock or  other assets. Let Uncle Sam pay the tax on your capital  gains from appreciated stock that you donate
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u Federal income taxes are assessed according  to a  progressive tax structure ; i.e., the larger the taxable income, the higher the  tax rate. u The next higher rate applies only to the  additional income in that bracket, not to your  entire income.
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This document was uploaded on 10/27/2011 for the course PFP 1300 at Texas Tech.

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PFP1300 - MANAGING YOUR TAXES Announcements u Welcomeback...

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