Skip to main content

Posts

Featured

Simple Tax Formula

Inevitably at this time of year, while attending a social gathering, someone brings up that dreaded word. Taxes. Then eyes roll, groans start and someone says "I just give it all to my tax preparer" and the subject changes. I have to giggle at myself because I was guilty of the same some time ago. I was like most people, didn't want to understand how they work nor did I want to take the time to.

Here is a simple 40,000-foot view of the tax structure.

Gross Income Subtract:For AGI (“above the line”) Deductions Equals:Adjusted Gross Income Subtract:From AGI (“below the line”) Deductions 1. The Greater of: a. Standard Deductionor b. Itemized Deduction 2. Qualified Business Deduction Equals:Taxable Income Multiply:Appropriate tax bracket incremental rate Equals: Income Tax Liability Add:Other taxes Equals:Total Taxes Owed Subtract:Credits Subtract:

Latest Posts

Health Savings Accounts

Ouch

IRS Scam

Letter from the IRS

Lunch With a Friend

Hobby or Business?