© Copyright 2006 - 2013 by M. Ray Gregg. All rights reserved.1 Federal Income Tax Overview for...

© Copyright 2006 - 2013 by M. Ray Gregg. All rights reserved. 1

Federal Income TaxOverview for Individuals


Basic FormulaAll Income

- Exclusions= Gross Income- Deductions= Taxable Incomex Tax Rate= Tax- Prepayments

and Credits= Refund or

Balance Due





Balance Due





Balance Due

Tables(req if TI < $100,000)

Rate Schedules





Balance Due


Basic Formula

• Prepayments– Withholding– Estimate

payments

All Income- Exclusions= Gross Income- Deductions= Taxable Incomex Tax Rate= Tax- Prepayments


Balance Due


Source: http://macnelly.com/shoefolder/shoe_archive.asp


Basic Formula


payments



Balance Due


Basic Formula


payments• Credits

– Popular– Visible



Balance Due


Which would you prefer?All Income



Balance Due

• Assume 30% marginal rate–$20 deduction or–$20 credit

credit





Balance Due


credit





Balance Due


deduction





Balance Due


credit





Balance Due





Balance Due

Gross Income- FOR= Adjusted Gross Income- FROM= Taxable Income


Gross Income- FOR= AGI- FROM= Taxable Income

Business

Personal

Generally speaking …


Gross Income- FOR= AGI- FROM= Taxable Income

More about FROM


Deductions FROM AGI

I. Choose LARGER ofA. Standard Deduction

B. Itemized Deductions


Deductions FROM AGI



1. Filing status


Standard DeductionFiling Status See p. 2/10

& front cover

Single $6,100

H of H $8,950

M F J $12,200

M F S $6,100


Deductions FROM AGI



1. Filing status

2. Extras (TP & Spouse)a. Ageb. Blindness


EXTRAS for Age & Blind

• See page 2/11 • Single $1,500• Married $1,200


Listen and consider these situations…

• Extras– Single

$1,500– Married $1,200

See p. 2/10& front cover

Single $6,100

H of H $8,950

M F J $12,200

M F S $6,100

???




$1,500– Married $1,200


Single $6,100

H of H $8,950

M F J $12,200

M F S $6,100

H (68) W (58)Son (28) (blind)

$13,400




$1,500– Married $1,200


Single $6,100

H of H $8,950

M F J $12,200

M F S $6,100

H (71) W (67) (blind)

$15,800




$1,500– Married $1,200


Single $6,100

H of H $8,950

M F J $12,200

M F S $6,100

H (67) (blind)Son (23) (blind)

$14,600, $11,950 or $9,100


Deductions FROM AGI



1. Filing status2. Extras (TP & Spouse)

a. Ageb. Blindness

3. Minimum


Minimum Standard Deduction(when dependents claimed by parents)

• See page 2/24• $1,000 or• Earned Income

+ $350

$1,000 min

$6,100 max



• Dependent child• Earned $6,300• Interest $3,000• Calculate Std Ded

$1,000 min

$6,100 max



• Dependent child• Earned $300• Interest $3,000• Calculate Std Ded

$1,000 min

$6,100 max



• Dependent child• Earned $3,000• Interest $1,000• Calculate Std Ded

$1,000 min

$6,100 max

$3,300


Deductions FROM AGI




a. Ageb. Blindness

3. Minimum


Itemized Deductions• Medical• Taxes• Interest• Charitable

contributions• Casualty Losses• Other


Deductions FROM AGI




a. Ageb. Blindness

3. Minimum


Deductions FROM AGI



II. Exemptions ($3,900)

A. Personal

B. Dependents


Deductions FROM AGI




A. Personal

B. Dependents Five Tests

(prior to ’05)


Five Tests for Dependents

• Support• Gross income Exceptions

(prior to ’05)


Exceptions to GI Test

• CHILD–Under 19 or–Full-time student under 24

(prior to ’05)


Five Tests for Dependents

• Support• Gross income• Member of Household OR

Relationship• Citizenship• Joint return

(prior to ’05)


* (entire year)

Personal Dependents(after ’04)

REQUIREMENTS FOR ALL

qual ID citizen jointreturn

claim noother dep

CHILDREN OTHERS

relationshipage

supportabode (>1/2)

relationship *gross income

support


Deductions FROM AGI




A. Personal

B. Dependents


Federal Income TaxOverview for Individuals

48

* (entire year)

Personal Dependents(after ’04)

REQUIREMENTS FOR ALL

qual ID citizen jointreturn

claim noother dep

CHILDREN OTHERS

relationshipage

supportabode (>1/2)

relationship *gross income

support© Copyright 2006 - 2013 by M. Ray Gregg. All rights reserved.

© Copyright 2006 - 2013 by M. Ray Gregg. All rights reserved.1 Federal Income Tax Overview for...

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