- Tax Planning
- Introduction
- Understand What Our Leaders Have Said Regarding Taxes
- Understand How Tax Planning Can Help You Attain Your Personal Goals
- Understand the Tax Process and Tax Strategies to Help You Lower Your Taxes
- Step 1: Calculate gross income from all sources minus losses, exclusions, and deferrals
- Step 2: Subtract adjustments to get your adjusted gross income
- Step 3: Subtract itemized or standard deductions (whichever is greater)
- Step 4: Subtract exemptions to get taxable income
- Step 5: Refer to the tax table and calculate your tentative tax
- Step 6: Subtract credits to calculate total tax owed
- Step 7: Subtract taxes paid to get total taxes owed/amount of refund
- Understand How to Minimize Tax Payments for a Given Level of Income
- Understand How To Be More Efficient With Your Taxes
- Understand the Major Tax Features of the US Tax System
- Summary
- Assignments
- Investments 1: Before you Invest
- Investments 2: Your Investment Plan
- Investments 3: Securities Market Basics
- Investments 4: Bond Basics
- Investments 5: Stock Basics
- Investments 6: Mutual Fund Basics
- Investments 7: Building Your Portfolio
- Investments 8: Picking Financial Assets
- Investments 9: Portfolio Rebalancing and Reporting
- Retirement 1: Basics
- Retirement 2: Social Security
- Retirement 3: Employer Qualified Plans
- Retirement 4: Individual and Small Business Plans
- Estate Planning Basics
Understand the Tax Process and Tax Strategies to Help You Lower Your Taxes
Preparing your income tax is a seven-step process. It includes:
- Start with your income from all sources, less IRS-allowed losses, exclusions and deferrals, which equals your gross income.
- Subtract adjustments to gross income; the result is your adjusted gross income (AGI).
- Subtract the greater of your standard deduction or your itemized deductions.
- Subtract your exemptions; the result is your taxable income.
- Refer to the IRS tax table and calculate your tentative tax.
- Subtract your credits; the result becomes your total tax owed.
- Subtract any taxes already paid. This leaves the amount of your balance due or amount of your refund.
I will discuss each of these areas.
Table 1: The Tax Process
