2017 Tax Rate Schedules: Have you adjusted your withholding’s? Calculate your estimated taxable income, and find your tax.

2017 Tax Rate Schedule

Around the middle of the year it is a good idea to ensure that by the end of the year you will have withheld your tax liability due. No more, no less.  It’s common to adjust your withholding’s during the year to reflect life events or just to put more money in your pocket at that time.  Time and time again it’s also common that you forget to adjust the withholding’s back to cover your tax liabilities.  Knowing what your tax due will be is half the battle, but equal parts importance to earning your wage and paying your bills. It should be part o2017 Tax Rate Schedulef your monthly budgeting.

 

There’s more to it obviously, but the Individual income tax formula  is as follows and can be used to estimate your taxable income to give you an idea what your up against and  give you time to gather your options to lower your taxable income in an effort to conserve AFTER TAX WEALTH.

 

Individual Income Tax Formula:

Income (broadly conceived) Add income together if you file married filing joint. Don’t forget distributions from 401k’s, retirement or taxable social security, investment income, and  net self-employment income or loss.

Less: Exclusions   Ill go into the list of exclusions later

= Gross Income

Less deductions

= Adjusted Gross Income

Less: [Itemized or standard deduction] and [exemptions] for every person on the tax form

= Taxable Income

 

To find the estimated tax for your bracket add

the tax + [the % over the amount]= Tax

 

 

 

 

 

Free Tax Return Preparation for Qualifying Taxpayers: VITA

Source: Free Tax Return Preparation for Qualifying Taxpayers

 

The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $54,000 or less, persons with disabilities and limited English speaking taxpayers who need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals.

In addition to VITA, the Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older, specializing in questions about pensions and retirement-related issues unique to seniors. The IRS-certified volunteers who provide tax counseling are often retired individuals associated with non-profit organizations that receive grants from the IRS.

Before going to a VITA or TCE site, see Publication 3676-B for services provided and check out the What to Bring page to ensure you have all the required documents and information our volunteers will need to help you. *Note: available services can vary at each site due to the availability of volunteers certified with the tax law expertise required for your return.

Some VITA sites offer CAA service to taxpayers along with their VITA program.

Find a VITA or TCE Site Near You

VITA and TCE sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country. To locate the nearest VITA or TCE site near you, use the VITA Locator Tool or call 800-906-9887.

When looking for a TCE site keep in mind that a majority of the TCE sites are operated by the AARP Foundation’s Tax Aide program. To locate the nearest AARP TCE Tax-Aide site between January and April use the AARP Site Locator Tool or call 888-227-7669.

At select tax sites, taxpayers also have an option to prepare their own basic federal and state tax return for free using Web-based tax preparation software with an IRS-certified volunteer to help guide you through the process. This option is only available at locations that list “Self-Prep” in the site listing.

What to Bring to your tax preparation appointment/What to send if your returns are prepared remotely.

What to Bring:

  • Proof of identification (photo ID)
  • Social Security cards for you, your spouse and dependents
  • An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for you, your spouse and your dependents if you do not have a Social Security number
  • Proof of foreign status, if applying for an ITIN
  • Birth dates for you, your spouse and dependents on the tax return
  • Wage and earning statements (Form W-2, W-2G, 1099-R,1099-Misc) from all employers
  • Interest and dividend statements from banks (Forms 1099)
  • Health Insurance Exemption Certificate, if received
  • A copy of last year’s federal and state returns, if available
  • Proof of bank account routing and account numbers for direct deposit such as a blank check
  • To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms
  • Total paid for daycare provider and the daycare provider’s tax identifying number such as their Social Security number or business Employer Identification Number
  • Forms 1095-A, B and C, Health Coverage Statements
  • Copies of income transcripts from IRS and state, if applicable

IRS Summertime Tax Tip 2017-15: Helpful Tips to Know About Gambling Winnings and Losses

Source: IRS Summertime Tax Tip 2017-15: Helpful Tips to Know About Gambling Winnings and Losses

 

Helpful Tips to Know About Gambling Winnings and Losses

Taxpayers must report all gambling winnings as income. They must be able to itemize deductions to claim any gambling losses on their tax return.

Taxpayers who gamble may find these tax tips helpful:

  1. Gambling income. Income from gambling includes winnings from the lottery, horseracing and casinos. It also includes cash and non-cash prizes. Taxpayers must report the fair market value of non-cash prizes like cars and trips to the IRS.
  2. Payer tax form. The payer may issue a Form W-2G, Certain Gambling Winnings, to winning taxpayers based on the type of gambling, the amount they win and other factors. The payer also sends a copy of the form to the IRS. Taxpayers should also get a Form W-2G if the payer withholds income tax from their winnings.
  3. How to report winnings. Taxpayers must report all gambling winnings as income. They normally should report all gambling winnings for the year on their tax return as “Other Income.” This is true even if the taxpayer doesn’t get a Form W-2G.
  4. How to deduct losses. Taxpayers are able to deduct gambling losses on Schedule A, Itemized Deductions, but keep in mind, they can’t deduct gambling losses that are more than their winnings.
  5. Keep gambling receipts. Keep records of gambling wins and losses. This means gambling receipts, statements and tickets or by using a gambling log or diary.

See Publication 525, Taxable and Nontaxable Income, for rules on gambling and Publication 529, Miscellaneous Deductions, for more information on losses. Publication 529 also lists specific types of gambling records a taxpayer may want to keep. Download and view IRS publications on IRS.gov/forms at any time.

IRS Summertime Tax Tip 2017-13: Tips to Keep in Mind on Income Taxes and Selling a Home

Source: IRS Summertime Tax Tip 2017-13: Tips to Keep in Mind on Income Taxes and Selling a Home

 

Homeowners may qualify to exclude from their income all or part of any gain from the sale of their main home.

Below are tips to keep in mind when selling a home:

Ownership and Use. To claim the exclusion, the homeowner must meet the ownership and use tests. This means that during the five-year period ending on the date of the sale, the homeowner must have:

  • Owned the home for at least two years
  • Lived in the home as their main home for at least two years    Gain.  If there is a gain from the sale of their main home, the homeowner may be able to exclude up to $250,000 of the gain from income or $500,000 on a joint return in most cases. Homeowners who can exclude all of the gain do not need to report the sale on their tax return

Loss.  A main home that sells for lower than purchased is not deductible.

Reporting a Sale.  Reporting the sale of a home on a tax return is required if all or part of the gain is not excludable. A sale must also be reported on a tax return if the taxpayer chooses not to claim the exclusion or receives a Form 1099-S, Proceeds from Real Estate Transactions.

Possible Exceptions.  There are exceptions to the rules above for persons with a disability, certain members of the military, intelligence community and Peace Corps workers, among others. More information is available in Publication 523, Selling Your Home.

Worksheets.  Worksheets are included in Publication 523, Selling Your Home, to help you figure the:

  • Adjusted basis of the home sold
  • Gain (or loss) on the sale
  • Gain that can be excluded

Items to Keep In Mind:

  • Taxpayers who own more than one home can only exclude the gain on the sale of their main home. Taxes must paid on the gain from selling any other home.
  • Taxpayers who used the first-time homebuyer credit to purchase their home have special rules that apply to the sale. For more on those rules, see Publication 523. Use the First Time Homebuyer Credit Account Look-up to get account information such as the total amount of your credit or your repayment amount.
  • Work-related moving expenses might be deductible, see Publication 521, Moving Expenses.
  • Taxpayers moving after the sale of their home should update their address with the IRS and the U.S. Postal Service by filing Form 8822, Change of Address.
  • Taxpayers who purchased health coverage through the Health Insurance Marketplace should notify the Marketplace when moving out of the area covered by the current Marketplace plan.

Avoid scams. The IRS does not initiate contact using social media or text message. The first contact normally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

Additional Resources:

I’m not going to stop filing my income tax returns… yet. But check out this documentary. I’m intrigued.

AMERICA — From Freedom To Fascism (Full Length Documentary)

 

 

The documentary America – From Freedom To Fascism can be viewed on youtube.com and has been viewed over 785,000 times.  The question, Aaron Russo, a well known producer and director, inquired about should be a top priority for every citizen of the United States.

 

The tax in question is solely the income tax on wages.  The following list (taken directly from the film) are the many types of taxes we maybe be required to pay depending on our wants and/or needs:

 Automobile Registration Tax | Building Permit Tax | Capital Gains Tax |  CDL License Tax |  Cigarette Tax |  Corporate Income Tax |  Dog License Tax |  Estate Tax |  Federal Unemployment Tax |  Fishing License Tax |  Food License Tax |  Fuel Permit Tax |  Gasoline Tax |  hunting License Tax |  Inheritance Tax |  IRS Interest and Penalties |  Liquor Tax |  Local Income Tax |  Luxury Tax |  Marriage License Tax |  Medicare Tax | Property Tax|  Parking Meters?|  Real Estate Tax |  Septic Permit Tax |  Service Charge Taxes |  Social Security Tax |  Road Usage Tax | Sales Tax | Recreational Vehicle Tax|  Road Toll Booth Taxes |   State Income Tax |  State Unemployment Tax |  Telephone Federal Excise Tax |  Telephone Federal Universal Service Fee Tax |  Telephone Federal, State and Local Surcharges Taxes |  Telephone Recurring and non Recurring Charges Tax |  Telephone State and Local Tax |  Telephone Usage Tax | Toll Bridge Tax | Toll Tunnel Tax |  Trailer Registration Tax |  Utility Tax |  Vehicle License Registration Tax |  Vehicle Sales Tax |  Watercraft Registration Tax |  Well Permit Tax |  Workers Compensations Tax | ….

And once you’ve paid all that, then there’s this: the Tax Rate Schedule for individuals.

(Picture taken from the text Concepts in Federal Taxation 2018 Edition)

2017 tax rate schedule

Keep in mind the term TAXABLE INCOME is imperative because it’s the base amount to determine what your tax will be according to the tax rate schedule.  It already accounts for most of those prior taxes listed above that you’ve paid and then some.

*Yes, there “credits and deductions” available to help lower that taxable income, but they will be covered in a different post.

Two concepts to notice with the tax rate schedule are:

  1.  There is the tax + the percentage over “the next dollar (S)” of income.
  2. You are either paying half (employee) or the full (self-employed) cost of your SOCIAL SECURITY TAX AND MEDICARE taxes throughout the year.

I had a client call me after I prepared her returns one time asking why she doesnt get a refund of boxes 4 and 6 on form W2.  Well ma’am, those are non-refundable taxes paid on your wages (employment taxes).  Box 2 is somewhat of a refundable tax meaning if you chose to withhold more than what’s due, you’ll get the difference back.

Social Security Rates
Old Age, Survivors, and Disability Insurance and Medical Health Insurance.
W2 boxes
Sample generic copy of form W2

 

AMERICA — From Freedom To Fascism (Full Length Documentary)

Corporate Fascism  is another film that I found fascinating.

 

There is so much more to discuss here, but this is just my intro into the topic of tax reform.  It’s a touchy subject, I know, but it should be on the minds of everyone who earns a living and spends their hard earned cash.  I encourage you to pull out last years copy of your W2’s and your 1040 (just 2 pages) and scrutinize it a little bit.  Know what your taxable income was last year. You have a tax adviser/preparer, yes, but it will benefit you to also have an understanding of this very important information.  You have a stake in you!

 

Currently, I try to use the Internal Revenue Code to my advantage to maximize after tax wealth; but that doesn’t mean that I don’t fantasize about what a world the less stress on the implications of income taxes would be like.  Anyway.  More to come.

IR-2017-121: Taxpayers Should Review Their Withholding; Avoid Having Too Much or Too Little Federal Income Tax Withheld

Taxpayers Should Review Their Withholding; Avoid Having Too Much or Too Little Federal Income Tax Withheld

WASHINGTON — The Internal Revenue Service today encouraged taxpayers to consider checking their tax withholding, keeping in mind several factors that could affect potential refunds or taxes they may owe in 2018.

Reviewing the amount of taxes withheld can help taxpayers avoid having too much or too little federal income tax taken from their paychecks. Having the correct amount taken out helps to move taxpayers closer to a zero balance at the end of the year when they file their tax return, which means no taxes owed or refund due.

During the year, changes sometimes occur in a taxpayer’s life, such as in their marital status, that impacts exemptions, adjustments or credits that they will claim on their tax return. When this happens, they need to give their employer a new Form W-4, Employee’s Withholding Allowance Certificate, to change their withholding status or number of allowances.

Employers use the form to figure the amount of federal income tax to be withheld from pay. Making these changes in the late summer or early fall can give taxpayers enough time to adjust their withholdings before the tax year ends in December.

The withholding review takes on even more importance now that federal law requires the IRS to hold refunds a few weeks for some early filers claiming the Earned Income Tax Credit and the Additional Child Tax Credit. In addition, the steps the IRS and state tax administrators are now taking to strengthen protections against identity theft and refund fraud mean some tax returns could face additional review time next year.

So far in 2017, the IRS has issued more than 106 million tax refunds out of the 142 million total individual tax returns processed, with the average refund well over $2,700. Historically, refund dollar amounts have increased over time.

Making a Withholding Adjustment

In many cases, a new Form W-4, Employee’s Withholding Allowance Certificate, is all that is needed to make an adjustment. Taxpayers submit it to their employer, and the employer uses the form to figure the amount of federal income tax to be withheld from their employee’s pay.

The IRS offers several online resources to help taxpayers bring taxes paid closer to what they owe. They are available anytime on IRS.gov. They include:

IRS Withholding Calculator – Online tool helps determine the correct amount of tax to withhold.
IRS Publication 505 – Tax Withholding and Estimated Tax.
Tax Withholding – Complete information on withholding, estimated taxes, FAQs, and more.

Self-employed taxpayers, including those involved in the sharing economy, can use the Form 1040-ES worksheet to correctly figure their estimated tax payments. If they also work for an employer, they can often forgo making these quarterly payments by instead having more tax taken out of their pay.

Source: IR-2017-121: Taxpayers Should Review Their Withholding; Avoid Having Too Much or Too Little Federal Income Tax Withheld