Last Updated 23 Jul 2020

Federal Income Tax Formula

Category Income Tax
Essay type Research
Words 245 (1 page)
Views 122

FEDERAL INCOME TAX FORMULA

Gross Income - Above the Line Deductions_____.

Adjusted Gross Income - Itemized or Standard Deduction - Exemptions_____.

Don't use plagiarized sources. Get Your Custom Essay on

Federal Income Tax Formula

just from $13,9 / page

get custom paper

Taxable Income x Applicable Marginal Tax Rates for Each Bracket Tax Liability - Tax Credits_____= TAX OWED ABRIDGED INCOME TAX ACCOUNTING

I. Gross Income [§ 61] 

  • A. Wages, Salaries, and Tips
  • B. Interest Income
  • C. Dividend Income
  • D. Other (Net)

Income—Reduced by Deductible Expenses

  1. State & Local Income Tax Refunds
  2. Alimony Received
  3. Business Income or Loss
  4. Capital Gains or Losses
  5. Taxable IRA Distributions, Pensions, & Annuities. Rents, Royalties, Partnerships, S-Corporations, Estates, Trusts
  6. Unemployment Compensation & Social Security
  7. Other Income

II. Less “Above the Line” Deductions

  • A. Unreimbursed Qualified Moving Expenses
  • B. Of Self-Employment Tax
  • C. Self-employed Health Insurance Deduction
  • D. IRA Deduction
  • E. Payments to Keogh Retirement Plan
  • F. Penalty on Early Withdrawal of Savings
  • G. Student Loan Interest Deduction
  • H. Alimony Paid
  • I. Tuition and Fees Deduction
  • J. Depreciation Deduction

“The Line” = Adjusted Gross Income (“AGI”)

III. Less the Greater of

  1. Itemized Deductions or
  2. the Standardized Deductions

A. Itemized Deductions:

  1. Medical and Dental
  2.  State Taxes
  3. Interest Expense on Qualified Mortgage Indebtedness
  4. Casualty & Theft Losses
  5. Miscellaneous Itemized Deductions
  6. Misc. Deductions Subject to 2% AGI Floor
  7. Misc. Deductions Exempt from 2% AGI Floor

B. Standard Deduction [§ 63]

IV. Fewer Exemptions = Taxable Income

V. Tax Liability = Taxable Income x Applicable Marginal Tax Rates

VI. Fewer Tax Credits

  • A. Historic Building Rehabilitation
  • B. Renewable Energy
  • C. Work Opportunity Tax Credit
  • D. Qualifying Child

Tax Credit = TAX OWED

Remember. This is just a sample.
You can get your custom paper from our expert writers

get custom paper

Cite this page

Federal Income Tax Formula. (2017, Jan 03). Retrieved from https://phdessay.com/federal-income-tax-formula/

Similar Topics

Not Finding What You Need?

Search for essay samples now

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Your Deadline is Too Short?  Let Professional Writer Help You

Get Help From Writers