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| are collected on all wages up to a limit. employees pay 6.2% for 12.4% on wages up to $94,000. self-employed people pay the full amount |
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| are collected on all wages. employees pay 1.45% and employers bay 1.45% for 2.90% on all wages--there is no upper limit. self-employed people pay the full amount |
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| is the process of calculating individual allowable deductions that exceed the amount available under the standard deduction. not every taxpayer can itemize |
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| is an amount allotted by the IRS for taxpayers who do not itemize deductions. it is a lump-sum deduction that comes off the taxpayer's income to lower the amount that will eventually be taxed |
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| are dollar for dollar reductions in your tax bill an are more desirable than tax deductions |
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| reduce the income that is ultimately taxed. deductions reduce your tax bill, but only by your tax rate. |
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| is the first cut at adjusting your gross reported income. it includes those adjustments that are allowed whether you itemized deductions or not |
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| the tax rate you pay on the last dollar of income. it is useful in determining what additional income will mean from a tax perspective |
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| is a dollar amount the IRS allows for you, your spouse, and every dependent in your household. the amount changes each year. there is a specific definition of dependent, which is the instructions for completing the forms. you can claim personal exemptions on all three tax forms |
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| is a parallel tax system that eliminates many common deductions to recalculate your taxes. it was supposed to only catch the very wealthy who claim so many deductions they never paid any taxes. instead, thanks to inflation, many upper middle class taxpayers are caught by it and forced to figure their taxes the traditional way and by the more stringent method. taxpayers must pay whichever tax bill is the highest |
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| an examination by agents of the IRS of your current and , possibly past, tax returns to ensure they are in compliance with tax law |
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