Paper Sample on Individual Taxation

Introduction

It refers to all the earnings one has received from all places of the world, including wages and salaries, tips, bonuses and commissions, fees for a jury, unemployment compensation, fringe benefits, and bargaining purchases of the employer for services or merchandise. Other constructively earned income includes life insurance, which is not taxed, al government interest is taxable, gambling winnings, and qualified dividends. There are different rates at which dividends are taxed at special rates, similar to capital gains. The prior laws have three broader categories on which taxation is made, (Foertsch, 2018). Other aspects that are subject to gross income include stock options, injury awards, awards, or prizes. Not all gross income is subject to taxation, and some categories have different rates.

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Gross Income Continued

Other benefits that contribute to gross income include social security benefits, pensions and annuities, capital assets, net operating losses, and foreign earned income exclusion. Tax refunds have two broader categories: federal and state, with both having repayments and interests. Any individual's total income is summed up from which allowable deductions are made to determine the tax due to pay.

Tax Schedules and Adjustments

The schedule had itemized deductions for personal expenses, including medical expenses, taxes paid before, interest paid, gifts to charity, and casualty and theft. Other tax schedules include profit and loss from a business, capital gains and losses, supplementary incomes, and farming profit and losses. Each schedule has different entries that must be entered to ensure that proper filing of taxation prevails. Income from corporations or S corporations is part of the extra income together with real estate mortgage interest. Each schedule has different entries that must be made for which they are distinct from others.

Some of the significant adjustments include interest for higher education and self-employment tax who pay both the employer and employee share. Moving expenses, on the other hand, are only exceptions to the armed forces on active duty. Business expenses are outlined under schedule C, which is for a sole proprietorship with various categories on which adjustments are to be made. Schedule E contains royalty, rental income, and flow-through for entitles. Material participation has a guideline on which extent of passive activity is conducted.

Other adjustments that are made include contributions to retirement plans, Roth IRA, which are exempt, early withdrawal penalties, and contributions to education savings accounts. The additional adjustment made has the health savings account contributions, farm income, and jury duty fees.

Conclusion

Thus, the questions seek to determine the number of deductibles that involve schedule C for profit and loss from a business. Active participation is relevant for a person who does qualify as a real estate person, which makes the other answers incorrect. Being considered as a non-passive activity may involve materially being engaged in the manufacturing process. Social security becomes partially adjusted if they exceed a specific limit, (Beer et al., 2018).

Some of the deductions include expenses resulting from dependency rates while the filing status determines tax rates deductions on given thresholds. Some of the thresholds include marriage status like single, married with joint or not and widows.

References

Beer, S., Klemm, M. A. D., & Matheson, M. T. (2018). Tax spillovers from US corporate income tax reform. International Monetary Fund.

Foertsch, T. (2018). US Effective Marginal Tax Rates on New Investment Under Prior Law and the Tax Cuts and Jobs Act. Available at SSRN 3272392.