Chapter 4 - Chapter 4 Managing Income Taxes Internal...

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Unformatted text preview: Chapter 4 Managing Income Taxes Internal Revenue Code The major tax laws enacted by the U. S. Congress. It is then interpreted by the Internal Revenue Service through the issuance of regulations which have the effect of law. Progressive and Regressive Taxes Progressive - A tax that takes a larger percentage of income from higher-income taxpayers Regressive - A tax that takes a larger percentage of income from lower-income taxpayers Marginal Tax Rate The tax rate applied to your last dollar of earnings The measure of tax savings benefits of a tax-deductible expense Avoid Taxes Through Proper Planning Practice legal avoidance (not evasion) Reduce taxable income through your employer Make tax-sheltered investments Postpone income Take all legal tax deductions Tax Records Never discard information about home purchases, retirement contributions, and investments. Keep other documents a minimum of 14 years. When in doubt, DO NOT throw out. ...
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