Ch03 - Chapter 3 Individual Taxation An Overview 2011 CCH...

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Chapter 3 Individual Taxation An Overview ©2011 CCH. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com
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Chapter 3 Exhibits 1. Federal Tax Formula 2. Gross Income 3. Examples of “For” AGI Deductions 4. Personal and Dependency Exemptions 5. Dependency Exemptions—Qualifying Child 6. Dependency Exemptions—Qualifying Relative 7. Dependency Exemptions—Married Dependents 8. Dependency Exemptions Multiple Support Agreement 9. Dependency Exemptions Divorced Parents Post 1984 CCH Federal Taxation Basic Principles 2 of 37 Chapter 3, Exhibit Contents A
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Chapter 3 Exhibits 10. Itemizing v. Standard Deduction 11. Examples of Itemized Deductions (Deductions “From” Adjusted Gross Income) 12. Additional Examples of Itemized Deductions 13. Standard Deduction Filing Status 14. Additional Standard Deduction 15. Criteria for Abandoned Spouse 16. Criteria for Surviving Spouse 17. Criteria for Head of Household CCH Federal Taxation Basic Principles 3 of 37 Chapter 3, Exhibit Contents B
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Chapter 3 Exhibits 18. Tax Returns of Dependents 19. Tax Returns of Dependents—The Kiddie Tax 20. Kiddie Tax 21. Self-Employment Tax 22. Filing Requirements 23. Tax Tables v. Tax Rate Schedule CCH Federal Taxation Basic Principles 4 of 37 Chapter 3, Exhibit Contents C
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Federal Tax Formula Gross Income – Deductions FOR Adjusted Gross Income = Adjusted Gross Income – Greater of Standard Deduction OR Itemized Deductions – Personal Exemptions = Taxable Income CCH Federal Taxation Basic Principles 5 of 37 Step 1: Compute taxable income Chapter 3, Exhibit 1a
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Federal Tax Formula Taxable Income x Tax Rate = Tax Liability (Total Tax) – Tax Credits and Prepayments + Alternative Minimum Tax (if any) + Employment Taxes (if any) = Net Tax Due or Refund CCH Federal Taxation Basic Principles 6 of 37 Step 2: Compute tax due (or refund) Chapter 3, Exhibit 1b
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Gross Income Gross income includes all items of income from whatever source unless specifically excluded. Examples of gross income include wages, salaries, tips, interest, dividends, alimony received, business income, rental income, royalties, pensions, and annuities. CCH Federal Taxation Basic Principles 7 of 37 Chapter 3, Exhibit 2
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Examples of “For” AGI Deductions Trade or business expenses Student loan interest One-half of self-employment tax Alimony payments Certain moving expenses IRA deductions 100% of medical and insurance premiums for self-employed taxpayers, their spouses, and dependents CCH Federal Taxation Basic Principles 8 of 37 Chapter 3, Exhibit 3
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Personal and Dependency Exemptions In computing taxable income, an individual is allowed a deduction for each personal exemption allowed. An exemption is allowed for each of the following: (1) Individual taxpayer and spouse.
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