AGI -- Adjusted gross income, AGI, is all the income
you receive over the course of the year such as wages, interest, dividends
and capital gains minus such things as contributions to a qualified
IRA, some business expenses, moving costs and alimony payments. Deductions
are expenses that the Internal Revenue Service allows you to subtract
from your AGI to arrive at your taxable income. The adjusted gross
income is the first step in calculating your final federal income
tax bill. The fastest ways to tax debt relief is to think back over
the past years and remember what expenses you have incurred and then
locate the back-up papers that go with them.
Credits -- After you figure your AGI, the next step
is to use government credits to reduce the amount of money that you
owe. Tax credits are more valuable than deductions because they directly
cut the amount of tax you owe, rather than reducing the amount of
taxed income. Talk to a licensed professional, there may be helpful
laws that you are not aware of to get you on the path to tax debt
relief.
Standard deduction -- This is a fixed dollar amount
that a taxpayer can subtract from their income. The standard deduction
is available to all filers and is determined by the taxpayer's filing
status. The amounts change each year because of inflation adjustments,
but you can find the current standard deduction levels by talking
to a professional about tax debt relief.
Itemized deductions -- These are expenses that can
be deducted from your AGI to help you reach a smaller income amount
upon which you must calculate your tax bill. Itemized deductions include
medical expenses, other taxes (state, local, property and sales tax),
mortgage interest, charitable contributions, casualty and theft losses,
unreimbursed employee expenses and miscellaneous deductions such as
gambling losses. When you itemize, make sure to get help in order
to maximize your tax debt relief.
Exemption -- This is an amount that the IRS lets
you subtract from your income to reflect all the people who count
on your income. Exemptions can be claimed for yourself, your spouse
and your dependents. The IRS allows a set amount for each exemption
and, as with deductions; this total is subtracted from your adjusted
gross income to come up with your final, lower earnings amount upon
which you must figure your tax bill. Your personal exemption amount
is in addition to any deductions, either standard or itemized, that
you claim.
Learn More at: www.citizenstaxrelief.com
About the Author
Rick Kelly has been a well respected magazine and newspaper colunist
in the fields of civic and business development for the past twenty
years.
