Tax Rebate | Tax Rebate 2011
Tax Rebate | Tax Rebate 2011
Tax is an important revenue that is collected by any government. In a Federal or Unitary democratic system such as the United States of America, which happens to be a Federal from of democracy, the central government or the federal government collects a tax that is titled as the 'income tax', which is its primary mode of taxation. On the other hand, there are some taxes such as property taxes that are collected by local and state governments. Everyone has to pay these and many other taxes, however, there is reprive in the form of tax deductions. Hence, when you are thinking of rent that you pay, it is just natural to think, is rent tax deductible.
Income tax in the United States of America is collected by Federal agency, Internal Revenue Service, which is also commonly referred to as the IRS. Internal Revenue Service has made two tax deduction provisions for the tax payers, in order to curb their tax burdens. These deductions have basically been made so that tax payers can reduce some important expenditures such as medical expenses from their income bracket, which is also known as taxable income. Taxable income is calculated by totaling the annual income of the taxpayer and subtracting deductible expenditures from it. As mentioned above, these deductions can be made in two ways, namely, standard deductions and itemized deductions. In any IRS tax deductions list, you will notice that itemized tax deductions have to be claimed by providing a legitimate proof of expenditures. Standard deductions on the other hand, are deducted on the recommendations of IRS. Standard deductions are uniform for all income tax filers. It must be noted that a tax payer can avail only one type of deduction (standard or itemized).The portfolio of real estate taxation in United States is usually handled by local authorities and State governments. Property taxes by state are basically decided by local governing bodies upon market prices of homes and real estates. On the basis of these surveys, states can grant rent deductions to taxpayers for state taxes, especially if the rent is above the prescribed fair rent limit. In order to claim proper deductions, you will have to consult a properly qualified and experienced tax relief attorney, who will help you to file for deductions.While calculating income tax, first income from all source is added. Next, certain direct adjustments are subtracted from the gross income, as specified by the Internal Revenue Services (IRS). This gives the adjusted gross income (AGI). Lastly come the deductions. Tax deductions are certain expenses borne by the individual, which can reduce his tax liability, as they are further subtracted from the adjustable gross income. Learn how to calculate income tax.As income increases, so does the amount of income tax payable. Tax deductions can considerably bring down the income tax payable, and hence assume great importance. Higher the individual in the tax bracket, more are the subsequent savings through deductions. Common tax deductions are discussed further for the same purpose. Alimony is a term that comes into picture when one files for a divorce or a separation. It is an amount that is paid by a person to his/her spouse to provide financial support post divorce/legal separation. Alimony payments can include rent, mortgage, utilities, medical costs incurred, etc. So, is alimony tax deductible? Yes it is. Alimony is tax deductible from your gross income on the tax returns in the year it is paid. Precisely, alimony is tax deduction for the person who pays the alimony and is included as taxable income for the person who avails the alimony. But in case of child support, the alimony is not taxable to the person who is in charge of the custody of the children.Let's take an instance to understand how is alimony tax deductible. Ron and Helen are a couple who have recently filed for a divorce. Ron has an annual income of USD 175,000 and Helen, a school teacher by profession, has an annual income of USD 23,000. Helen obviously has a lower tax rate as compared to Ron. So both of them have to understand, how is the alimony tax deductible and how it can benefit them mutually. If Ron claimed to support with alimony, he could not only file for his own income tax returns but also could help Helen by paying her enough to compensate for the extra tax she would have to pay.Temporary Alimony - Tax Deductible: Temporary alimony is the one which is paid for a short duration of time. These payments are paid usually after a petition for divorce is filed. The temporary alimony is paid by the spouse with higher income to the receiving spouse with a meager income or no income. The payments made in a temporary alimony depend on various factors like receiving spouse's income, secondary sources of income for receiving spouse, tax deductibility on the income of the spouses, medical insurance and union dues. This alimony ensures a financial stability during the highly emotive phase of divorce. The receiving spouse gets the temporary alimony until the court gives its judgment on dissolution of the marriage. But is temporary alimony tax deductible? It is not deductible if the joint returns filed by both the spouses is still valid.
Lump Sum Alimony - Tax Deductible: In many cases, instead of a regular taxable alimony, lump sum alimony is acceptable by a spouse. There is only one financial transaction between the two spouses and that includes all the cash payments and buy-outs. This alternative is better than the regular alimony payment as the receiving spouse does not have to depend on the other spouse all through out the life. Lump sum alimony is not tax deductible if the lump sum cash transfer happens within an year.Divorce is an emotional phase in the life of a couple. Hence, IRS excludes legal fees and costs incurred in obtaining divorce from alimony (tax deductible). It also prohibits deduction for costs incurred for personal advice and counseling. Hope the above article helped in understanding whether alimony is tax deductible or not.
Ten Ways To Reduce Your Property Taxes How To Enjoy Nfl Flag Football? What Does an NFL Handicapper Do Enrolled Agents Should Understand The Tax Implications Of 403B Plans Chicago Bears Tickets : The Bears Is First Team In Nfl To Reach The Regular Season Win Mark Of 700 Watch Cincinnati Bengals vs Pittsburgh Steelers live Streaming NFL Week-14 on 12 December The GOP Has My Support On Bush Era Tax Rates Watch Tampa Bay Buccaneers vs Washington Redskins live Streaming NFL Week-14 on 12 December Filing Your Taxes For The First Time Free Tax Facilitate - How To Find It Your Tax Come Back - How The Tax Return Method Works Fair Share of Taxes Investment property tax deductions