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Unformatted text preview: The taxable income for a U.S. Individual Tax Return is calculated by taking the total income reported on Form 1040, Form 1040-A or Form 1040 EZ less allowable deductions. Pursuant to IRS rules, the term income is broadly defined. Most business expenses are deductible and must be declared on Schedule C, Profit or Loss from Business. Individual taxpayers may also elect to deduct a personal allowance, also commonly referred to as a personal exemption, and certain personal expenses, including but not limited to state taxes and contributions to charity. Some deductions are subject to limits and phase out depending on the level of total income. Tax adjustments and deductions are calculated according to IRS rules and regulations. Home mortgage interest, for instance, can be claimed without limitation and regardless of the level of total income. Medical expenses, on the other hand, cannot be claimed as an allowable deduction total income....
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This note was uploaded on 03/01/2012 for the course ACCOUTNING 550 taught by Professor Abner during the Spring '11 term at DeVry Houston.
- Spring '11