Federal Income Tax Formula

FEDERAL INCOME assess approach pattern staring(a) Income preceding(prenominal) the position tax write-offs____ familiarised Gross Income Itemized or Standard deductive reasoning Exemptions_________________ revenueable Income x Applicable fringy measure rank for Each wall bracket Tax Liability Tax attributes_________________ = TAX OWED ABRIDGED INCOME TAX ACCOUNTING I. Gross Income 61 A. Wages, Salaries, and Tips B. provoke Income C. Dividend Income D. Other (Net) IncomeReduced by Deductible Expenses 1. subject & Local Income Tax Refunds 2. Alimony Received 3. Business Income or Loss 4. Capital Gains or losings 5. rateable IRA Distributions, Pensions, & Annuities . Rents, Royalties, Partnerships, S-Corporations, Estates, Trusts 7. Unemployment Compensation & well-disposed Security 8. Other Income II. Less Above the Line Deductions A. Unreimbursed fitting Moving Expenses B.? of Self-Employment Tax C. Self-employed Health Insurance Deduction D. IRA Deduction E. P ayments to Keogh Retirement propose F. Penalty on Early onanism of Savings G. Student Loan Interest Deduction H. Alimony Paid I. development 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 & thieving Losses 5. Miscellaneous Itemized Deductions i)Misc. Deductions Subject to 2% AGI cornerstone 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 Rates VI. Less Tax realizations A. historic Building Rehabilitation B. Renewable postcode C. Work Opportunity Tax Credit D. Qualifying Child Tax Credit = TAX OWED