Taxable income covers salaries, income form other sources, interest earned, dividends, and gains and losses from capital gains. The adjustable gross income can be deduced from the first page of the Federal tax return.
If you follow the rules and keep track of your expenses throughout the financial year and uses all above the line deductions to lower your AGI you will stand to receive a larger tax refund. It is important for you to find out what the set limits for itemized deductions are. Read through the IRS guidelines carefully. Details are at: http://www.irs.gov/instructions/i1040gi/index.html .
The IRS has set limits on total itemized deductions. If your AGI exceeds USD 145950 (single) or USD 72,975) if married and filing separately), many deductions are reduced by around 3% of the amount your AGI exceeds the baseline of USD 145,950.
According to financial gurus every individual must undertake intelligent tax planning exercises. And it is important to use different legal ways to increase the deductions and take maximal advantage of tax credits. The basics are:
Every year read all the articles and tips written for the World Wide Web by tax professionals. This will ensure that you do not miss any methods of reducing the taxes you pay.
If you are computer savvy you can compute AGI and fill all tax return forms including 1040St by using reputed tax software like TurboTax, TaxAct Delux, TaxCut, or and Complete Tax. Before using or purchasing any tax preparation software check with other users as to the efficacy and ease of use and surf the internet to read reviews.
Pay taxes and file returns honestly. Save money through legal avenues.
Barry Allen is a freelance writer for Online Tax Firm, the premier website to find tax, return tax, tax software, free tax filing, sales tax, services tax,income tax, property tax and many more.