文档介绍：Chapter 2
Determination of Tax
Learning Objectives
Use the tax formula pute an individual’s taxable e
Determine the amount allowable for the standard deduction
Determine the amount and the correct number of personal and dependency deductions
Learning Objectives
Determine the amount of child credit
Determine the filing status of individuals
Explain the tax formula for corporations
Explain the basic concepts of property transactions
Formula For Individual e Tax
E FROM WHATEVER SOURCE DERIVED minus EXCLUSIONS= GROSS E minus DEDUCTIONS FOR ADJUSTED GROSS E= ADJUSTED GROSS E - deduct GREATER OF ITEMIZED OR STANDARD DEDUCTION and PERSONAL AND DEPENDENCY EXEMPTIONS= TAXABLE E. TAXABLE E times TAX RATE (tax table or schedule) = GROSS TAX minus CREDITS AND PREPAYMENTS= NET TAX PAYABLE OR REFUND DUE
Formula For Individual e Tax
e from whatever source derived
Minus: Exclusions
Gross e
Minus: Deductions for Adjusted Gross e
Adjusted Gross e(AGI)
Minus: Deductions from adjusted gross e:
Greater of itemized deductions or the standard deduction
Personal and dependency exemptions
Taxable e
Times: Tax rate or rates (from tax table or schedule)
Gross tax
Minus: Credits and tax payable or refund due
$ xxx,xxx
(xxx)
$ xx,xxx
(xxx)
$ x,xxx
(xx)
(xx)
$ x,xxx
.xx
$ xx
(x)
$ xx
Definitions
e
Exclusion
Gross e
Deductions for adjusted gross e (AGI)
Adjusted gross e (AGI)
Deductions from AGI
Definitions
Itemized or standard deductions
Personal and dependency exemptions
Taxable e
Tax rates and gross tax
Credits and prepayments
Itemized Deductions
Qualifying medical expenses, taxes, investment and residential interest, charitable contributions, personal casualty and theft losses, & miscellaneous if greater than standard deduction
Some items limited by varying percentages of adjusted gross e
Maximum reduction in such itemized deductions is 80% of total itemized deductions
Standard Deduction
Varies based on:
Filing status
Age
Vision
Used when greater than
Itemized
• Loss