Viewpoints from Kaizen

U.S. Individual Income Tax— Part2 Whom May I Claim as a Dependent?   Certain tax benefits, such as an advantageous filing status or certain tax credits on your U.S. individual income tax return, require either a qualifying child or qualifying relative. This article will introduce you to dependency definitions and related requirements.   Qualifying Child   Your child must have the required Social Security number that was issued on or before the due date of the tax return (including extensions) and must pass all of the following tests to be your qualifying child:   (1)     Close Relative   Under the close relationship test, to be a qualifying child of a taxpayer, the child must be the taxpayer’s son, daughter, adopted child, stepchild, foster child, brother, sister, step brother, step sister or a descendent of any of them.   (2)     Age Limit   In general, at the end of the filing […]

U.S. Individual Income Tax Part 6 Tax Liability or Refund   After subtracting your adjustments and deductions from your gross income, you have your taxable income. Now you can use the IRS’s tax table to calculate your preliminary tax liability for the year.   The individual income tax rate (2019) structure is a progressive tax rate structure.   2019 Tax Rate Single Head of Household Married Filing Jointly Married Filing Separately 10% $0–$9,700 $0–$13,850 $0–$19,400 $0–$9,700 12% $9,701–$39,475 $13,851–$52,850 $19,401–$78,950 $9,701–$39,475 22% $39,476–$84,200 $52,851–$84,200 $78,951–$168,400 $39,476–$84,200 24% $84,201–$160,725 $84,201–$160,700 $168,401–$321,450 $84,201–$160,725 32% $160,726–$204,100 $160,701–$204,100 $321,451–$408,200 $160,726–$204,100 35% $204,101–$510,300 $204,101–$510,300 $408,201–$612,350 $204,101–$306,175 37% Over $510,300 Over $510,300 Over $612,350 Over $306,175   For example, if: a taxpayer with a single filing status has $92,000 of taxable income. The income tax liability in 2019 is calculated as the below: ($9,700 − $0) × 10% = $970 ($39,475 − $9,700) × 12% = […]

U.S. Individual Income Tax Part 5 Tax Credits   After you figure your tax, you may be eligible for certain credits that lower your tax liability. This article will give you a brief introduction to some basic tax credits.   Child Tax Credit   Beginning with Tax Year 2018, you may be able to claim the Child Tax Credit if you have a qualifying child under the age of 17 and meet other qualifications. The maximum amount per qualifying child is $2,000. Up to $1,400 of the credit can be refundable for each qualifying child as the Additional Child Tax Credit. A refundable tax credit may give you a refund even if you don’t owe any tax.   Your qualifying child must have a Social Security Number issued by the Social Security Administration before the due date of your tax return (including extensions) to be claimed as a qualifying child […]

U.S. Individual Income Tax Part 4 How to Calculate Your Taxable Income?   Some people may be interested in how to calculate own taxable income (line 11b in Form 1040). This article will give you a brief guideline.   Step 1        Total Income   The IRS requires you to report all your income that you have received during the tax year. This includes your wages, taxable interest, ordinary dividends, taxable IRA distribution, taxable pensions and annuities, taxable social security benefits, capital gain (attach Schedule D) and other income (attach Schedule 1). Your total gross income is determined by adding up all types of income.   Step 2        Adjusted Gross Income (AGI)   Your AGI is the next step in figuring out your taxable income. Once you report all of your income on your Form 1040 and Schedule 1, you will then have the chance to adjust your income on Schedule […]