business HW

BUS-121 Spring 2017 Planning Your Name: Instructor: Frank Caperino Tax Strategies Chap 3 Assignments / Notes

Chapter Assignments: (10 points – Two Required parts – See bottom of page r and separate document) Page Required: Tax Questions for the IRS (Handout 5 points) Required: See Chapter 3 Supplemental Form 1040 Tax Assignment (Handout – 5 points) Due: Mon Mar 6

Chapter Sections: Taxes in Your Financial Plan The Basics of Federal Income Tax Filing Your Federal Income Return Using Tax Planning Strategies

Chapter Terms: sales tax, excise tax, property tax, estate tax, inheritance tax, gift tax, income tax, Social Security / Medicare Form 1040 earned income investment income – interest, dividends, rent, capital gains passive income versus active income exclusions tax-exempt income – (example: municipal bonds) tax-deferred income – (example: retirement accounts) adjustments to income Adjusted Gross Income (AGI) tax shelters tax deductions standard deduction versus itemized deductions – (You can only take one or the other; you can not take both!) itemized deductions go on Schedule A (state income tax, real estate tax, mortgage interest, gifts to charities, etc.) personal exemptions taxable income marginal tax rate average tax rate AMT – The Alternative Minimum Tax tax credits withholding and estimated payments tax strategies – home mortgage interest deduction, starting a business tax audit – correspondence audit versus office audit versus field audit tax avoidance versus tax evasion

Required: Tax questions for the IRS (www.irs.gov or 800-829-1040) – Be careful! Make sure your information is current! 1) What are the maximum amounts that can be contributed to a Traditional IRA, Roth IRA and 401(k) per year? 2) What is the maximum amount of capital loss that can be deducted from your income taxes per year? 3) How long is the extension of time to file your income taxes that Form 4868 gives a taxpayer? 4) What percentage(s) of the estimated taxes should an individual taxpayer pay through withholding? Careful! 5) What are the names of the 2 or 3 types of educational tax credits available to college students & their parents? (5 points) – When researching the above questions, make sure you find the data for 2015!

Required: Supplemental Form 1040 Tax Assignment Handout: Supplemental Tax Assignment. This assignment is very much like the first and second tax exercises. (5 points)