Just about everybody finds themselves a little crazy during tax time worrying about their tax debt. “What do I actually owe,” you wonder “and what are my write-offs?” “I don’t have any money left, how am I supposed to pay the IRS?” Ideally you’re like the majority of people, working for an employer who will withhold money out of each check, or you’re one of the other half, on unemployment and again, they are withholding money. But that doesn’t stop you from wondering, “Do I owe, or can I get some back?”
That depends on what your income was for the year that the IRS knows about. The IRS gives you immediate write-offs and you’re allowed to earn, almost $10,000 if you’re single, and up to $30,000 if you’re a family of 2 parents and 3 kids without any taxes owed, as of 2011. If you have money withheld, and you’ve earned less than what adds up in your standard write-offs, calculated on lines 40-42 in the 1040 tax form,you are within your rights to request all your with holdings come back. On a 1040 IRS tax form, for 2012 taxes, the buck stops at line 43. Right there you subtract your deductions from your income and you then are left with taxable income.
On the first 22 lines of a 1040 tax form for the year 2011, you are asked to declare who the people are in the family and what are the various incomes and losses. Should your income be considerably above whatyou can deduct for standard write-offs, then you aremost likely going to disappointed by what the tax tables tell you is the total you owe on your taxable income. Therefore you must be able to add in some losses to go along with the declared income. On this year’s 1040 form, lines 23-35 are all about giving you places to put losses. On lines 12-13 and 14 you get 3 more chances to put in losses.
When you add it all up, the 1040 IRS tax form has more lines to help you get your income down than it has lines for your positive income. Much of it is very complicated, but it’s structured to get income offset by expenses. Don’t we all incur expenses just living and business expenses as well? Without these expenses we would be able to keep our income. Doesn’t it become obvious that the IRS is inviting you totake advantage of the many ways you may subtract the negatives from your income? In another article of mine I clue you in on how to use a Schedule C if you are an employee who needs most of his with holdings back, entitled “The Beauty of the Schedule C”.
Union Consulting each year helps taxpayers around the country save millions of dollars in taxes.
