21 Jun Conduct online research for f
Conduct online research for federal income tax brackets for the current year. Which tax bracket do you Öt into for your gross household income? How close is your gross household income to the next lowest tax bracket? Create a list of possible deductions for your household. Are you able to reduce your taxable income enough to place you in the next lowest tax bracket?If not, what are some steps you could take to do so (this year or next year)? The requirements below must be met for your paper to be accepted and graded: •Write a minimum of 400 words (approximately 2 pages) using Microsoft Word. •Attempt APA style, see example below. •Use font size 12 and 1” margins. •Include cover page and reference page. •At least 60% of your paper must be original content/writing. •No more than 40% of your content/information may come from references. •Use at least two references from outside the course material, preferably Text book, lectures, and other materials in the course may be used, but are not counted toward the two reference requirement. Reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) must be identiÖed in the paper and listed on a reference page.Reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) must come from sources such as, scholarly journals found online newspapers such as The Wall Street Journal, government websites, etc. Sources such as Wikis, Yahoo Answers, eHow, etc. are not acceptable fomat has to be better than this but with columns went by the ofÖce of a CPA with the accompanying subtle elements. are fruitful experts with a consolidated AGI of $400,000. Our family include 2 kids ages 16 and 23 the most seasoned works part-time and ears $16,000. the father has heard that it might be beneÖcial if the son who makes $16,000 claim my younger child as a qualiÖed dependent for income tax purposes. Following is what CPA suggested to both of them. If Deduction is claimed by me Under section 151 of IRS:- Tax liability of son:- Tax liability of Ölling jointly:- AGI 16000 AGI 400000 Less: Deduction under section 151 2000 Less: Deduction 0 Total taxable income 14000 Total taxable income 400000 Tax payable (2013 slab rate) 1400 Tax payable (2013 slab rate) $ 108,344.64 17850 10% $ 1,785.00 54649 15% $ 8,197.35 73899 25% $ 18,474.75 76649 28% $ 21,461.72 175299 33% $ 57,848.67 1649 35% $ 577.15 $ 108,344.64 Thus total tax payable = $1400 + $108,344.64 Thus total tax payable = $109,744.64 If Deduction is claimed by Under section 24 of IRS:- Tax liability of son:- Tax liability of Ölling jointly:- AGI 16000 AGI 400000 Less: Deduction 0 Less: Deduction (Note 1) 0 Total taxable income 16000 Total taxable income 400000 Tax payable (2013 slab rate) 1600 Tax payable (2013 slab rate) $ 108,344.64 17850 10% $ 1,785.00 54649 15% $ 8,197.35 73899 25% $ 18,474.75 76649 28% $ 21,461.72 175299 33% $ 57,848.67 1649 35% $ 577.15 $ 108,344.64 Note 1:- Deduction will be maximum of $1,000 which will reduce by $50 per thousand of AGI exceeding the threshold limit which is$110,000 Deduction = $1000 – (50*(400000-110000)/1000) Deduction = NIL Thus total tax payable = $1600 + $108,344.64 Thus total tax payable = $109,944.64 Total tax payable in case 1 where adult brother claimed deduction under section 151 is lesser than total tax payable under situation 2, therefore it is advised to let thre claim deduction in his return instead of calming deduction in joint return Öled by Note: I have the right to claim deduction on behalf of my wife as it fulÖlls the requirement of section 152 or IRS which deÖnes the meaning of eligible dependent. Apart from above tax planning go for various other Itemized deductions. Itemized deduction is a way to convert your taxable income into non-taxable income. Itemized deductions are deducted from gross total income and the limit of deductions is speciÖed by the IRS. The basic motive behind providing the deductions is to provide the social security to people and channelize their investment in the growth of economy. There are six major groups of deductions in the present scheme which are as follows:- 1. Medical expenses. 2. Local taxes paid. 3. Interest on mortgage. 4. Charitable contributions. 5. Casualty and theft losses. 6. Job expenses and miscellaneous expenses. The intent of the law to provide the deductions for speciÖc expenses is that the government wants to channelize the investments of the people for the beneÖt of themselves and the economy as whole. If a person wants to reduce his tax burden, then he will deÖnitely go for a deduction. Now it does not matter where he invests or spends the money to claim deduction but ultimately the goal of the government is achieved. Therefore the deductions are only allowed for speciÖc investments and expenditures.
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