Federal
Income Tax Deduction - Give Me The Basics
Federal income tax
deduction is a term that probably everyone has heard before. But
what is an actual federal income tax deduction? Income tax deductions
are a legal requirement for the United States tax law. If you
are a U.S. citizen, and fall into an income tax bracket, you are
required to pay the federal income tax deduction. To calculate
your individual federal income taxs, you deduct all exemptions
and allowable income tax deductions from your annual gross income.
There are a few exemptions
from having to pay the tax deduction. These include any money
from life insurance earned, any money from gifts or inheritances,
money from any personal injury settlements, and any interest earned
on state or municipal bonds. There are some considerations when
trying to take advantage of any of these exemptions in regards
to the income tax deduction, so it is best if you have a tax preparer
help you to decide with tax deductions you can pay, and which
you cannot.
There are additional
tax deductions that may reduce your federal income tax liability.
The standard tax deduction is just one of many available federal
income tax deductions. Consulting with J.M. Trippon & Company
CPAs is a great way to learn all of the tax deduction options
available. The following is a partial list of legal tax deductions
that can be taken: trade and business expenses, alimony, IRA contributions,
net capital losses and any money used on property that is used
to generate an income.
There are federal income
tax deductions that are income related. For example the alternative
minimum tax. This tax deduction can be taken if your income exceeds
a certain amount. Consulting with your tax CPA will clarify if
you qualify for this tax deduction.
There is one last option
for almost anyone; to paying the federal tax deduction straight
out and this itemized deduction. This can include state and local
income and taxes, donations to charity, employee transfer costs,
medical expenses, casualties and any loss that may have been incurred
from this and any interest paid on mortgages. Itemized deduction
can be a bit more of a hassle than it's worth though, depending
on how many of these you qualify for, so check with your tax preparer
ahead of time.
In the end is up to
you whether or not you will go with just the standard deduction
or with a more detailed one such as itemizing. But either way,
at least now you hopefully will have a better understanding of
some of things involved with a federal income tax reduction.
Taking advantage of
federal income tax deduction is perfectly legal, as long as you
qualify for the tax deduction. The consequences can be very harsh
if you claim a deduction that you are not elligible for. This
could lead to an IRS audit, penalties and interest and in extreme
cases criminal charges.
To
learn which federal income tax deductions you qualify for, and
to seek opportunities to legally reduce your tax liability, please
call J.M. Trippon & Company CPAs to schedule your FREE tax evaluation
at 713-661-1040.