Income Tax Lawyers
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Income Tax Lawyers
Income tax lawyers hold specialized experience filing income taxs and handling complex tax issues.
What Numbers Go into Calculating My Income Tax?
A wide range of number go into calculating a person's income tax. The three primary numbers are:
- Taxable income
- Adjusted gross income
- Gross income
1) What Is Taxable Income?
Taxable income is the number that will be multiplied against you current tax rate. Tax rates vary, but generally you have a higher rate of taxation depending on how much money you make, your marital status, and the amount of dependants you have. Taxable income is generally defined to be your adjusted gross income (see below) minus deductions (both standardized and itemized). The deductions spoken of here are both "above the line" and "below the line" deductions, which are deductions that are a mix or qualified and unqualified deductions.
2) What Is Adjusted Gross Income?
Adjusted gross income is generally defined to be your gross income (see below) minus your deductions. The deductions spoken of here by the tax code are "above-the-line" deductions which all persons can take. Section 62 of the tax code lists "above the line" deductions which may be taken by all:
- Trade and business deductions
- Certain trade and business deductions of employees
- Losses from sale or exchange of property
- Deductions attributable to rents and royalties
- Certain deductions of life tenants and income beneficiaries
- Pension, profit-sharing, and annuity plans of self-employed individuals
- Retirement savings
- Certain portions of lump-sum distributions from pension plans
- Penalties forfeited because of premature withdrawal of funds from time savings accounts or deposits
- Reforestation expenses
- Certain required repayments of supplemental unemployment compensation benefits
- Jury duty pay remitted to employer
- Deduction for clean-fuel vehicles and certain refueling
- Moving expenses
3) What Is Gross Income?
Gross income is defined to be "all income, from whatever source derived." This phrase gives the IRS maximum broad power to tax a wide variety of types of income, and allows the IRS to err of the side of taxing you rather than not taxing you. In general, it is the taxpayer who bears the burden of proving that they should not be paying the tax, not the IRS.
Should I Contact an Income Tax Lawyer?
Tax issues can become highly complex and may require assistance from a professional. You may need to contact a lawyer if you have failed to pay taxes for several years, if you have back taxes that you cannot pay, or if you are audited. Any form of tax fraud can result tin serious consequences.
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Last Modified: 05-08-2014 12:02 PM PDT
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