Bài giảng Pfin4 - Chapter 3: Preparing Your Taxes

PFIN4Preparing Your Taxes 3Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GITMAN/ JOEHNK/ BILLINGSLEY*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1 Discuss basic principles of income taxes and determine your filing status2 Describe the sources of gross income and adjustments to income, differentiate between standard and itemized deductions and exemptions, and calculate taxable income3 Prepare a basic tax return using the appropriate tax forms and rate schedules4 Explain who needs to pay estimated taxes, when to file or amend your return, and how to handle an auditLEARNING OUTCOMESPFIN4 | CH3*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Know where to get help with your taxes and how software can make tax return preparation easier 6 Implement an effective tax planning strategy LEARNING OUTCOMES (continued)PFIN4 | CH3Taxes*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Dues paid for membership in a societyCost of living in a countryObjective of tax planning Maximize the amount of money that one can keep by legally minimizing the amount one paysPFIN4 | CH3Income Taxes*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Type of tax levied on taxable income by the federal, state, and local governmentsProgressive tax structure: Larger the amount of taxable income higher the rate at which it is taxedMarginal tax rate: Paid on the next dollar of taxable incomeAverage tax rate: Rate at which each dollar of taxable income is taxed on averageCalculated by dividing the tax liability by taxable incomePFIN4 | CH3Categories of Filing Status*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Single taxpayersMarried filing jointlyMarried filing separatelyHead of householdQualifying widow or widower with dependent childPFIN4 | CH3Take-Home Pay*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Employer withholds a portion of income every pay period and sends it to the IRS to be credited to the tax accountEmployer withholds funds for federal income taxes and for FICA (Social Security) taxesOther payroll deductionsLife and health insurance, savings plans, retirement programs, professional or union dues, and charitable contributionsPFIN4 | CH3Taxable Income*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Amount of income subject to taxesGross income: Total of taxpayer’s income subject to federal taxes that includes:Active incomePortfolio incomePassive incomePFIN4 | CH3Exhibit 3.2*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Capital Gains Tax Categories as of 2013PFIN4 | CH3Adjustments to (Gross) Income*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Allowable deductions from gross incomeEducator expenses (limited), higher education tuition costs (limited), IRA contributions (limited), self-employment taxes paid, self-employed health insurance paymentsAdjusted gross income (AGI)Amount of income that remains after subtracting all allowable adjustments to income from gross incomePFIN4 | CH3Deductions*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH3Exemptions*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Deductions from AGI based on the number of persons supported by the taxpayer’s incomeCan be claimed for oneself, his/her spouse, and dependentsPersonal exemption can be claimed only oncePFIN4 | CH3Considerations for Calculating Taxable Income*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH3Exhibit 3.4*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Taxable Income and the Amount of Taxes Due (2013)PFIN4 | CH3Filing Considerations*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Estimated taxes: Payments required on income not subject to withholding that are paid in four instalmentsUsual filing deadline is April 15PFIN4 | CH3Filing Considerations*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH3Time beyond the usual April 15 deadline during which taxpayers can file their returns without incurring penaltiesFile extensionFiled to adjust for information received after the filing date of the taxpayer’s original return or to correct errorsAmended returnExamination by the IRS to validate the accuracy of a given tax returnTax auditTax Preparation Services*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. National and local tax servicesCertified public accountants (CPAs)Enrolled agents (EAs)Tax attorneysComputer-based tax returnsPFIN4 | CH3Effective Tax Planning*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Tax evasion: Illegal act of failing to accurately report income or deductions and failing to pay taxesTax avoidance: Act of reducing taxes in ways that are legal and compatible with the intent of CongressObjectives of tax planningTo reduce taxesTo shift taxesTo defer taxesPFIN4 | CH3Tax Strategies*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Maximizing deductions - Bunch deductions into one tax year if this allows you to itemize rather than take the standard deductionIncome shifting: Taxpayer shifts a portion of income to relatives in lower tax bracketsTax-free and tax-deferred incomeSome investments like municipal bonds provide tax-free incomeTax deferred: income that is not subject to taxes immediately but that will later be subject to taxesPFIN4 | CH3*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Taxes Income taxesProgressive tax structureMarginal tax rateAverage tax rateFederal withholding taxesFederal Insurance Contributions Act (FICA) or social security taxKEY TERMSTaxable incomeGross incomeAdjustments to (gross) incomeAdjusted gross income (AGI)Standard deductionItemized deductionsTax creditsEstimated taxesAmended returnPFIN4 | CH5*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARYThe objective of tax planning is to maximize the amount of money that you can keep by legally minimizing the amount of taxes you payCalculating income tax involves several steps and many computationsTax income is calculated on the basis of tax rates, tax credits, tax forms and schedules, and the procedures for determining tax liabilityPFIN4 | CH5