PF

1. What really counts?

2. EARNED UNEARNED

3.  Money paid for work.
 Includes: Salary, Wages, Tips, Commissions, & Bonuses.
 Unemployment Benefits
 Sick Pay
 And some noncash fringe benefits your employer provides
-- a company car, discounts on property or services, country
club memberships, tickets to entertainment or sporting
events, life insurance coverage of more than $50,000!

4.  Money received from interest or dividend
payments,
 Profits from assets you sold.
 Business & farm income.
 Rent, royalties (like what a musician earns when their
song is played on the radio), gambling winnings, and
alimony payments.
 Earnings from your retirement fund and Social security
are also considered unearned income. are considered
unearned income, as are Social Security payments.
 Alimony is considered unearned income.

5. Earned Income
+
Unearned Income
=
Gross Income
Now you will take this amount and legally whittle
it down using exemptions and deductions to
get your
Adjusted Gross Income.

6.  By using legally allowed adjustments &
subtractions and…
 Depending on your filing status and the form you
file
 You will take these amounts and subtract them
from your Gross Income to get the Adjusted
Gross Income
 Plus, you can deduct even more….

7.  Filing Status: There are 5 different types of filing
status-Single, Married Filing Jointly, Married Filed
Separately, Head of Household, Qualifying
Widow(er) with Dependent Child- each receives a
Standard Pre-set Deduction
 Tax-Allowable Expenses: Mortgage Interest,
Charitable Contributions, Large Medical Expenses
(that are greater than the standard deduction
amount).

8.  People that depend on you for support– such
as…
Spouse, kids, possibly parents, and yourself.
 The IRS allows you to multiply this number of
people by a dollar amount (adjusted for
inflation annually) and then subtract it from
your income.

9.  After all these adjustments, exemptions,
deductions, and subtractions, you now have
your taxable income.
 This is the dollar amount you look for in the
tax tables to see what your tax bill is.

10.  Child Support is not considered income by the
person receiving it and cannot be taken as a
deduction by the person paying it. Because it is
money used to support someone – other than the
person receiving it- the child.
 Alimony IS considered income by the person
receiving it and must be reported by the person
paying it and receiving it.

11.  http://www.irs.gov/businesses/small/article/0,,id=117613,0
 http://www.bankrate.com/finance/taxes/determining-taxab