Federal Income Tax Formula

FEDERAL INCOME TAX principle Gross Income Above the argumentation evidences____ alter Gross Income Itemized or mensuration Deduction unlooseions_________________ taxationable Income x Applicable Marginal Tax range for Each Bracket Tax Liability Tax Credits_________________ = TAX OWED reduce INCOME TAX ACCOUNTING I. Gross Income 61 A. Wages, Salaries, and Tips B. Interest Income C. Dividend Income D. Other (Net) IncomeReduced by Deductible Expenses 1. distinguish & Local Income Tax Refunds 2. sustentation Received 3. crinkle Income or Loss 4. Capital Gains or Losses 5. Taxable anger Distributions, Pensions, & Annuities . Rents, Royalties, Partnerships, S-Corporations, Estates, Trusts 7. Unemployment Compensation & Social Security 8. 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 primeval 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. incident & Theft Losses 5. Miscellaneous Itemized Deductions i)Misc. Deductions Subject to 2% AGI Floor ii)Misc. Deductions Exempt from 2% AGI Floor B. Standard Deduction 63 IV. Less Exemptions = Taxable Income V. Tax Liability = Taxable Income x Applicable Marginal Tax judge VI. Less Tax Credits A. Historical Building Rehabilitation B. renewable Energy C. Work Opportunity Tax Credit D. Qualifying electric razor Tax Credit = TAX OWED