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Unformatted text preview: Takes St. Ded. And “B” Itemizes Taxpayer A Taxpayer B $60,000 $60,000 income Deduction $6,100 $11,100 Exemption $3,900 $3,900 Taxable $50,000 $45,000 $5,000 income Tax due $ 8,429 $ 7,179 $1,250 Tax paid in $15,000 $ 7,500 $6,571 $ 321 Adjusted gross Refund Difference $5,000 Should taxpayer A brag about the big refund?? 44 Hidden Taxes Hidden Taxes Alternative Minimum Tax (AMT) Implemented during Reagan years to ensure wealthy paid some tax Rates were not indexed for inflation, thus many middle class taxpayers are now hit Interest on mortgages > $1 million and in excess of $100,000, not deductible Sch. A and exemptions will phase out for high income taxpayers in 2013 45 How to Avoid Common Filing Errors How to Avoid Common Filing Errors Attach necessary documentation Put your social security number, the tax year, and a phone number on your check Make your check payable to United States Treasury, not the IRS Keep a photocopy of your return Use proper postage, get a receipt Check everything again­­and file on time DEPOSIT REFUNDS DIRECTLY TO BANK USE TAX SOFTWARE 46 Tax Audits Tax Audits All returns are computer audited!!!!! 1.3 % of all returns are manually audited Large or unusual deductions are more likely to be audited Three types of audits Correspondence audit minor questions Office audit takes place at an IRS office Field audit visits your home or business You have audit rights! 47 Taxes and Ethics Taxes and Ethics Tax Evasion Illegally not...
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