Do taxes complicate you? Same was the case with us initially. But do you how we set things simple for ourselves? By learning common tax terms. You should also know about these times, and if there is something that you do not understand, be sure to ask your accountant Celebration FL.
The AGI, which is an abbreviation for the Adjusted Gross Income is the amount of money you receive throughout the year. This includes wages, dividends, capital gains and interests. Other expenses such contributions to IRS, moving costs, alimony payments and the like can be deducted from AGI. Whenever your taxable amount is determined, calculating your AGI is the first step. Your accountant Celebration FL can provide you more details about the process.
As the name implies, tax credits are very similar to the ones you can get at a standard store. Once you estimate your taxes, you can use a tax credit to decrease the amount on the check that you will send to the IRS. Compared to deductions, these are more worthy because they directly reduce the amount you pay in tax rather than decreasing your taxable income.
Tax deductions are those expenses which the IRS lets you remove your AGI so that you can determine the taxable income. Generally, the lower your taxable income, the lesser amount of taxes you will have to pay. Deductions are those amounts that you can remove from your taxable income so as to pay lesser taxes.
Deductions can be of two types. One is the standard deduction and the others are general ones. Examples of these are IRA contributions, alimony payments, moving expenses and interest on student loans. Ask your accountant Celebration FL or view the 1040A form so that you know what is included on the complete list. You will have to itemize these deductions, which implies you will have to submit the 1040 form and mention all the deductions that you avail on Schedule A.
Standard deductions are those fixed amounts that you can remove from your income. This incentive is applicable to every tax payer and depends on the filing state. Every year, the exact amount changes because of inflation. Your accountant Celebration FL can provide you with more information about these. If you use the standard deduction, itemization is not required.
Exemption is the amount that he IRS can deduct from your annual income. This will be so if there are other people who are financially dependent on you and need your income. So if you have a spouse or children, you can get a tax exemption. Each exemption is fixed and is utilized with the same purpose, i.e. to lower your taxable income.
Progressive taxation is referred to as a method in which the applicable tax rate increases with a rise in income levels. The entire tax system is based on this, and tax rates range from 10% for the lowest income levels to 35% for the highest income levels.
If you need more information about our Celebration, FL accounting and tax services, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.