1 / 10

Chapter 13

Chapter 13. Individual Income Tax and Tax Planning. Federal Income Tax Law Objectives. Revenue-raising objectives Economic objectives Social objectives. Individual Income Tax Rates. Ordinary rates Capital gain rates Capital asset/dividends Sale or exchange Long-term holding period

jackie
Download Presentation

Chapter 13

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 13 • Individual Income Tax and Tax Planning

  2. Federal Income Tax Law Objectives • Revenue-raising objectives • Economic objectives • Social objectives

  3. Individual Income Tax Rates • Ordinary rates • Capital gain rates • Capital asset/dividends • Sale or exchange • Long-term holding period • Alternative minimum tax (AMT) rates

  4. Determining Income Tax Liability—Taxable Income • Total income (from whatever source derived) • Less: Exclusions from gross income • Gross income • Less: Deductions for adjusted gross income • Adjusted gross income (AGI) • Less the larger of: standard deduction or itemized deductions • Less: personal and dependency exemptions • Taxable income

  5. Deductions for AGI • Business expenses • Net capital losses ($3,000) • Self-employed expenses • Alimony paid • IRA contributions • Moving expenses • Education expenses

  6. Itemized Deductions • Medical expenses (>7.5% AGI) • State and local income taxes • Property taxes • Mortgage interest • Investment expenses (<Investment income) • Charitable contributions • Casualty/theft losses (>10% AGI + $100) • Miscellaneous (>2% AGI)

  7. IRS Guidance • Letter rulings • Determination letters • Revenue rulings • Private letter rulings • Revenue procedures • Technical advice memoranda • Taxable income and tax rates • Tax credits

  8. The IRS Audit Process • Penalties • Failure-to-file penalties • Failure-to-pay-tax penalties • Accuracy-related penalties • Fraud penalties • Audit process • Selection and screening process • Types of audits • Outcomes of audits

  9. Payroll Taxes • FICA taxes for employers and employees • 6.2% OASDI on $102,800 (2009) and $ (2010) • 1.45% Medicare • Self-employment tax • Double the employee’s rate • FUTA tax calculation • Tax avoidance versus tax evasion

  10. Tax-Advantaged Investments • Investment in tax-exempt securities • Tax shelters • Employee benefits • Acceleration of deductions • Deferral of tax gains • Exemption opportunities

More Related