Premium Essay

Income Tax: Small Family and Minimal Deductions

In: Business and Management

Submitted By elmo11b
Words 1560
Pages 7
Income Tax: Small Family and Minimal Deductions

ACC 401
July 23, 2012
Instructor

Income Tax: Small Family and Minimal Deductions One of the jobs of tax consultants is to determine the types of forms to complete when assisting a person in completing his or her income tax forms. The number and types of forms used is determined based-on the person’s income, if the person is having his personal or business tax forms completed, the deductions the person is taking, and the proof of deductions that a person has saved. The family chosen for this paper is a small one-child family completing their personal income tax, filing jointly, and using minimal deductions. Based on the couple’s income, a recent home purchase, attendance in college, dependent child, and deductions, the most appropriate forms to complete are the 1040 U.S. Individual Income Tax Return, earned income credit form, form 8812-Additional child tax credit, form 8863 education credits and form 5405 (First Time Homebuyer Credit and Repayment of the Credit) (Internal Revenue Service, 2012). Scenario: The couple is Jackson R. Parker and his wife Elizabeth Parker. They have a healthy non-disabled three-year-old son named Colton. Mr. Parker is in the United States Army. Mrs. Parker is unemployed and does not work, but attends college full-time. The couple purchased their first home on February 23, 2011. They paid $300,000 for their home. They had few receipts with the exception of the husband’s W-2 from and the wife had a letter of proof that she attends college at a state university and receipts of payments for her classes. They have no other income than the husband’s and have not saved any type of receipts to support other tax deductions (Internal Revenue Service, 2012). The W-2 form presented by Mr. Parker is a form that is used by the government that reports an employee’s wages and…...

Similar Documents

Premium Essay

Income Tax

...Jason Stitt Income Tax Chapter 10 9. A Health Savings Account (HSA) plan requires a high-deductible medical insurance policy, which means that the premiums on the policy will be less than for a low-deductible policy. The contributions to the HSA are deductible for AGI, which reduces the nondeductible amount of itemized deductions subject to certain limitations, and the taxpayer does not have to itemize to obtain the deduction. The HSA distributions pay for the deductible medical expenses and they are not included in gross income. Also, the income earned on the HSA is not included in gross income if it is used to pay medical expenses not covered by the high-deductible plan. 13. There are many nontax issues (financial, investment, and personal) involved in the Greggs’ decision, but this discussion will be limited to the tax issues. Interest on the home equity loan will be fully deductible, partly as home equity interest and partly as business expense (related to business use of the car). Interest on the conventional loan will be deductible only to the extent the car is used for business purposes. The tax issue related to a possible sale of Bluebird stock concerns deductibility of the loss that will be incurred on the sale. If the Greggs have capital gains in excess of the loss, the entire loss can be offset against the gains. If they have no capital gains, they will be limited to a capital loss deduction of $3,000 in the year of sale, with excess capital......

Words: 1013 - Pages: 5

Premium Essay

Tax Deduction in the Philippines

...Tax Deduction Definition: Tax deductions pertain to taxes proper which do not include surcharges, penalties, or fines incident to delinquency. These are taxes which have been previously deducted from gross income and a refund of the same was received. Nature: According to NIRC Sec 34 C., taxes are deductible with the exception of those with respect to which the law does not permit deduction. (1) In General. - Taxes paid or incurred within the taxable year in connection with the taxpayer's profession, trade or business, shall be allowed as deduction, except (a) The income tax provided for under this Title; (b) Income taxes imposed by authority of any foreign country; but this deduction shall be allowed in the case of a taxpayer who does not signify in his return his desire to have to any extent the benefits of paragraph (3) of this subsection (relating to credits for taxes of foreign countries); (c) Estate and donor's taxes; and (d) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed.  Provided, That taxes allowed under this Subsection, when refunded or credited, shall be included as part of gross income in the year of receipt to the extent of the income tax benefit of said deduction.    (2) Limitations on Deductions. - In the case of a nonresident alien individual engaged in trade or business in the Philippines and a resident foreign corporation, the deductions for taxes provided in paragraph (1) of this......

Words: 304 - Pages: 2

Premium Essay

Income Tax

...Income Tax Law Income Tax Law and the National Budget 2010-2011 Md. Abdur Rashid, FCMA B.Com. (Hons.), M.Com., DAIBB, LLB, FCMA Income Tax Law explain changes in tax struc-ure of an economy over time under t the impact of economic development and of political and social factors. Tax structure is affected by economic development in three ways: (a) tax base undergoes a change as the develop- ental process m proceeds; (b) change in the tax base brings about changes in the revenue system: and (c) economic development leads to changes in the objectives of tax policy. Bangladesh Government collects taxes on account of custom duty, sales tax, value added taxes, excise duty, cess, fees, fines, penalties, income tax, advalorem duty, etc. It appears that to fulfill the objectives of tax policy the Government every year brings some changes in various tax laws to collect more taxes on the basis of above tax structure. be established for those items to repair or servicing and thus to reduce the unemployment problems in the country. National Budget Every year before preparing National Budget the National Board of Revenue holds series of meetings with various trade bodies, trade associations, groups of people, various academic and professional Institutions. It seems that this year the discussions have been held on various scopes and opportunities of collecting more taxes. The discussions, of course, have been held in various dimensional scopes. In such a meeting organized by......

Words: 1863 - Pages: 8

Free Essay

Income Tax

...roughly over 300 million citizens in the U.S, in 2009 only 53% of these people payed federal income tax, while the other 47% are paying next to nothing and in many cases profiting from the government. I strongly believe in the “American Dream”, the ideology that America is a place where any thing is possible and a man or women can earn a modest living with hardwork and dedication, it seems as though this ideology is being skewed. I’m not againist the wealthy paying their fair share of taxes, but it seems like they may be carrying the entire load. I believe that if we create programs to benefit everyone, everyone should pay into them not just the top 10%. The article points out that the financial recession of 2008 contirbuted a lot to this overall affect, and that years prior to 2009,the Bush Administartion inacted several tax laws that saved the top 10% of taxpayers million of dollars and negatively affected the middle class. The artcile also sates that federal income taxes are the #1 source of income for the government, netting an estimated $900 billion annually. With the top 10% of Americans contributing the most, I believe that this system needs to be restructured. I somewhat agree with the flat tax rate, where everyone just pays a percentage of their income without recoginizing deductions, but being as though I am a college student, those deductions greatly affect my overall federal tax return. I belive that there is a better system where everyone would benefit and......

Words: 337 - Pages: 2

Premium Essay

Income Tax

...Accounting for Income Taxes I. Overview – Accounting for income taxes involves both intraperiod and interperiod tax allocation. Intraperiod allocation matches a portion of the provision for income tax to the applicable components of net income and retained earnings. Income for federal tax purposes and financial accounting income frequently differ. Income for federal tax purposes is computed in accordance with the prevailing tax laws, whereas financial accounting income is determined in accordance with GAAP. Therefore, a company’s income tax expense and income taxes payable may differ. The incongruity is caused by temporary differences in taxable and/or deductible amounts and requires interperiod tax allocation. II. Intraperiod Tax Allocation – Intraperiod Tax Allocation involves apportioning the total tax provision for financial accounting purposes in a period between the income or loss from: a. Income from continuing operations b. Discontinued operations c. Extraordinary items d. Cumulative effect of an accounting change e. Other comprehensive income i. Pension Adjustment ii. Unrealized gain/loss on available for sale security iii. Foreign translation adjustment f. Components of stockholders’ equity iv. Retained earnings for prior period adjustments and v. Items of accumulated (other) comprehensive income g. General Rule – Any amount not allocated to continuing......

Words: 2526 - Pages: 11

Premium Essay

Income Tax

...Wilman Martinez Income Tax 1 Dr. Nazik Roufaiel Module 1 Assignment Part 1 March 21, 2014 35. Serena operates a lawn maintenance service in Southern California. As most of her employees are itinerant, they are paid on a day-to-day basis. Because of cash-flow problems, Serena requires her customers to pay cash for the service she provides. a. What are some of the tax problems Serena might have? Serena might have problem keeping track of sales taxes and/or paying FICA and FUTA taxes. b. Asses Serena’s chances of audit by the IRS? Serena will have a great chance of getting audit by IRS because she Receives payment in cash and those transactions are easier to hide. (Hoffman & Smith 2014, p. 1-21) 42. On a federal income tax return filed five years ago, Andy inadvertently omitted a large amount of gross income. a. Andy seeks your advice as to whether the IRS is barred from assessing Additional income tax in the event he is audited. What is your advice? It will depend on how much money was omitted. The IRS is barred as long as the amount omitted was less than 25% of gross income and the tax return is not view as fraudulent. The IRS can only go back three years to access additional tax liability. On the other hand, if it is more than 25% the statue of limitation is increased to 6 years, then the IRS is not barred. (Hoffman & Smith 2014, p. 1-23) I would recommend Andy to fix the mistake....

Words: 1008 - Pages: 5

Premium Essay

Bill Robinson - Tax File Deductions

...in Obstetrics and Gynecology. His wife Joy is employed as a administrator with home healthy agency. Because of the medical malpractice insurance, Bill discontinued delivering babies. To offset loss of income Joy became a sales person for several direct marketing companies. Direct Marketing companies required Joy to purchase a certain amount of inventory each month. Joy received commissions based on the sales and also part of commissions earned by the down line distributors Joy has signed up as a upline distributor. Joy has been deducting $20,000 as business losses from five years since she started business. IRS audited Mr. and Mrs. Robinson tax filings and disallowed deductions for business losses stating them under Hobby losses. --------------------------------- Johnson and Jason, CPAs 100 Dorsett Boulevard St.Louis, MO 63043 October 18, 2010 Mr. and Ms. Robinson 120 Boulevard Richmond Hill, Georgia 31324 Dear Mr. and Ms. Robinson This letter is in response for your request of our advice and review of your recent filed tax returns. Our conclusions are based upon the tax laws and research of different cases we have studied. After review of your tax situation, we came to conclusion that we do not have enough significant reasons to support deduction of Marketing Business losses. We can deduct losses only if we satisfy certain factors according to Regulation 1.183-2(b). There are nine factors under Regs. § 1.183-2(b) used to evaluate whether......

Words: 1739 - Pages: 7

Free Essay

Tax Deduction on Moving Expense

...Tax Deduction on Moving Expense Table of Contents Executive Summary 3 Moving Expenses 4 What is a Moving Expense? 4 Conditions Needed to Deduct Moving Expenses 5-6 What can we Deduct? 6 Reimbursement and Withholdings 7 How to Report Moving Expenses 8 Works Cited 10 Executive Summary The process of deducting moving expenses is long and contains many conditions such as the time test, the distance test, and closely related to work condition. Therefore, some mistakes may easily be made along the way, such as deciding whether or not to include reimbursement as income or as an expense, and if it is counted as income. The employer has the responsibility to withhold tax from the reimbursement, unless the move was solely for the benefit of the employer, not as compensation for the employee, only the personal expenses such as meals and lodging is counted in income. Also expenses must be deemed reasonable so one must watch out account for expenses only related to the trip, not sightseeing detours. Therefore, one must take great care when handling moving expenses, because it might become a deduction, or a determination of income. Tax Deduction: Moving Expense When we graduate from xxxx, we will get a new job in another city or state. The good news is that we may be able to list our moving expenses tax deductable on our itemized tax forms if we meet certain qualifications. Although there are many expenses we can deduct, there are even......

Words: 1928 - Pages: 8

Premium Essay

Income Tax

...of the Income Tax 1. A General Overview of the Income Tax 2. Coverage Scope of the Income Tax 3. Deductions Allowed for Taxation Purposes Part 1. A General Overview of the Income Tax In the RM the unitary income tax was introduced on 1.01.98 and replaced three taxes: the profit tax of enterprises, the individual income tax, and the profit tax of banks and other crediting institutions. In most countries of the world individual and corporate income tax vary; this is why the unification of these taxes is an innovation in the taxation practice. The income tax subjects comprise juridical and natural persons receiving income from any sources on the territory of the RM during the taxation year, and juridical persons-residents, which receive investment and financial income from sources outside the RM. Since there are various interpretations of the terms individual and company in the taxation and civil legislation, we will explain some of them. According to the taxation legislation juridical persons are: 1. Any enterprises, institutions, and organizations involved in enterpreneurial activity with the exception of individual enterprises and farms. 2. Non-residents with an economic presence on the RM territory According to the taxation legislation natural persons are the individual enterprises and farms. According to the taxation legislation, taxation subjects are the entities legally responsible for paying taxes. The income tax object is the net income,......

Words: 3979 - Pages: 16

Premium Essay

Income Tax

...Chapter 9 Individual: OC/OI Other sources of income 3(a) in Div. B: * CPP pension benefit: can elect to do income splitting – 50% of the combined CPP benefit received. Contributor must be >60 years old * Pension income: 50 of combined pension income. >65: eligible pension income includes annuity payments under RPP.RRSP,DPSP. RRIF <65: RPP + death of spouse payment * Retiring allowance: pension income and death benefits. A. retirement from an office/employment in recognition of long service B. loss of office including court-awarded damages received by taxpayer * Annuity: full amount of annuity payments entitled from an investment of money – capital portion * Amount received from deferred income plans: 1. RESP: life-time contribution limit 50,000, over max. 31 years. Contribution not deductible/ is taxed, accumulated investment income is taxable to beneficiary (<21) as “Educational assistance payments:” a. CESG- Canada educations saving grant: 20% of $2500 of annual contributions to an RESP of children up to 18/ max. of $500 per year per child/ max. CESG per child is $7200/ additional CESG: net income of family <43561, 20% matching of first $500, if NI 43561-87123, 10% b. CLB- Canada learning bond: child bofrn after dec. 31 2004, first CLB of $500, $100 each year including year turning 15. Limit < $2000 per child, can be transferred to RESP before 18 c. Distribution: back to subscriber if hes alive and either......

Words: 2385 - Pages: 10

Premium Essay

Personal Income Tax Usa

... PERSONAL INCOME TAX IN THE UNITED STATE Group’s member:Nguyễn Như Nam (C)Phan Thu AnNguyễn Thùy DungHoàng Bá SơnNgô Thị Ánh TuyếtDate: 15/12/2014 | Table of Contents PART 1. The review on the tax system in the United States 2 1. The tax administration system in United States 2 2. The tax policy system in United States 3 PART 2. The review of the main content of the tax laws 5 I. The scope of application 5 1. Taxable incomes 5 2. Non-taxable 7 3. Payers. 7 II. The taxation bases 9 III. The tax calculation method 10 1. Gross Income 10 2. Adjusted gross income 17 3. Tax Credits 17 4. Tax Rates 20 5. Deductions and exemptions 22 IV. Tax declaration, submission and refund 32 1. Declaration 32 2. Submission 33 3. Refund 34 REFERENCES 36 PART 1. The review on the tax system in the United States Taxation is an important for each country. Taxation provides a material to distribute economic resources towards those with low incomes or special needs. Taxes provide the revenue needed for critical public services such as social security, health care, national defense, and education. 1. The tax administration system in United States The U.S. system of tax administration is based on the principle of self-assessment. In a self-assessment system, taxpayers calculate and pay their own taxes without the intervention of a tax official. If this is not done appropriately and within the prescribed timeframes, the tax......

Words: 12375 - Pages: 50

Premium Essay

Saving on Income Tax

...research about tax planning and ways to save tax for both individual taxpayers and business owners. There are many different types of tax planning that can be beneficial for all taxpayers. Besides that, by researching of ways to help individual taxpayers and business owners to save tax, I have learnt that there are many tax exemptions such as medical, dental, and childcare benefits. Moreover, the government has provided taxpayers with many tax reliefs such as personal relief, wife relief, child relief, medical expenses relief and so many more to help reduce the chargeable income of individual taxpayers. Furthermore, the government also provides tax rebates for individual taxpayers as well. By applying all the knowledge gain into tax planning, taxpayers will be well equipped in managing their taxes and will be able to make prompt payment and be able to fully utilize all the different ways for them to save on tax. Task 1 : Explain what tax planning is. 1.1: Meaning of Tax Planning Tax planning involves planning in order to avail all exemptions, deductions, and rebated provided in Act. The Income tax law itself provides for various methods for tax planning. Tax planning, whether personal or company, are interrelated and integrate part of the planning process. Generally it is provided under tax exemptions, tax deductions, personal rebates and personal reliefs. Tax planning is resorted to maximize the cash inflow and minimize the cash outflow. Since tax is kind of......

Words: 3817 - Pages: 16

Premium Essay

Miscellaneous Tax Deductions

...If you have expenses that qualify as miscellaneous itemized deductions, you can deduct the total amount of those expenses only to the extent that they exceed 2% of your adjusted gross income. There are three types of expenses that are subject to the 2% limit. They are unreimbursed employee expenses, tax preparation fees and other expenses. For an explanation of deductible and nondeductible expenses refer to Publication 529, Miscellaneous Deductions. Certain unreimbursed employee expenses are deductible as miscellaneous itemized deductions on Form 1040, Schedule A. To be deductible, the expense must be: * Paid or incurred in the tax year * For carrying on your trade or business of being an employee, and * Ordinary and necessary You can deduct other expenses subject to the 2% limit that you pay to: * Produce or collect taxable income * Manage, conserve, or maintain property held for producing such income, or * Determine, contest, pay, or claim a refund of any tax http://www.irs.gov/taxtopics/tc508.html For example, you can donate a car to a homeless shelter and receive a miscellaneous itemized tax deduction. Congress enacted Title 26, Section 170 of the US Code which allows taxpayers to deduct the fair market value of property contributions or value of cash gifts to qualified, tax-exempt charities. The government does put a limit on the ceiling amount for a charitable donation to 50% of the taxpayer's AGI. Also, if the fair market value......

Words: 309 - Pages: 2

Free Essay

Income Tax

...Federal Income Taxes I Cynthia Ripa February 13, 2012 Final April is a time of the year that every tax paying citizen of the United States has to file their annual income tax. I will be using an example of Harold & Sarah Petersan to explain how to file a form 1040. While I will explain Form 1040, I will include the examples for Schedule A, itemized deductions, and form 2441, child and dependent care expense. Harold and Sarah will be using form 1040 to file their income tax because they have a child and they sold their house during the tax year. At the top of the form on page one is where the taxpayer(s) enter their personal information, including name, address, and social security numbers. Then they will check married filing jointly for their filing status. The next section is exemptions. This section is where you claim your dependents. This includes their name, social security number and relationship to the taxpayer; check the box if the qualifying child is for the child tax credit which in this case, check the box. Then you add the number of exemptions, this includes the tax payer, spouse, dependents who lived with you, dependents who did not live with you due to divorce or separation, and final other dependents. Harold and Sarah will be claiming 3 exemptions, Harold, Sarah, and Tara (their 7 year old daughter who lives with them). The next section on form 1040 is the income section. This is where you include income from wages, salaries, tips, taxable......

Words: 1503 - Pages: 7

Premium Essay

Income Tax Administration and Performance of Small Scale Enterprises in Uganda

...INCOME TAX ADMINISTRATION AND PERFORMANCE OF SMALL SCALE ENTERPRISES IN UGANDA ACASE STUDY OF GULU MUNICIPALITY BY HENRY EGYEYU ABSTRACT   The research study was aimed at establishing effect of Income Tax Administration on the performance of small Scale Enterprises. Using Gulu Municipality as a case, in all Small Scale Businesses which were selected were analyzed and supplementary data was got from the respondents. The objectives of the study were to examine the Income Tax Administration, to examine the Performance of SSEs in terms of Growth, Profitability, and Survival, to find out the relationship between income tax administration and the performance of SSEs.   In the methodology the researcher used research design, study population, sampling procedures which included sample design and also sample size, the data sources like primary data, secondary data, data collection methods and other methods of collecting data.    Presentation, interpretation, and the discussions of the findings basing on the responses from the respondents of the questions and the findings were tax payers don’t get tax education, make little profits from their business among others Summary, conclusions, recommendations of the findings of the research analysis the findings of the study and draws summary of the main findings of the study and finally the research draws and gives recommendation and further research. CHAPTER ONE ...

Words: 7597 - Pages: 31

vePatria | Ralph 2.0 Film Torrent en français | 77 Serial opowiada o trjce dziewczyn Emmie, Cleo i Rikki, a pźniej także Charlotte i Belli, ktre przypadkiem odkrywają magiczną jaskinię i nabywają zdolność przemiany w syrenę w 10 sekund po każdym kontakcie z wodą. Od tamtej pory ich życie bardzo się skomplikowało. Chcą utrzymać swoją tajemnicę w sekrecie jednak nie zawsze im się to udaje. Dziewczynom pomaga kilku zaufanych chłopakw, takich jak Lewis i Will. Muszą rwnież uważać podczas pełni, gdyż działanie Księżyca jest dla nich niebezpieczne. Akcja wszystkich odcinkw rozgrywa się w mieście Gold Coast w Australii. Dramat, Familijny H2O: wystarczy kropla / H2O: Just Add Water 2006 Dodany: 10 Dni temu