There is a particular urgency to lowering one’s adjusted gross income this year,
(PRWEB) October 22, 2012
Adjusted gross income is the number that determines a taxpayer’s tax bracket, exemption phase outs, whether or not a Roth IRA can be funded, whether or not the alternative minimum tax will apply, and many more issues that are important to taxpayers. Lee R. Phillips, Counselor of the United States Supreme Court, will lecture in Pittsburgh, PA this Sunday, October 21st, on ways to lower a taxpayer’s adjusted gross income in 2012.
The adjusted gross income number is the number calculated on the last line of page one on a 1040 IRS tax form. Accountants often refer to “above the line” and “below the line” calculations. The adjusted gross income line is “the line.”
“Because so many aspects of an individual’s tax liabilities are determined by the adjusted gross income calculation, it is the most important planning issue that an individual can consider,” said Phillips. “Standard tax planning often doesn’t affect a person’s adjusted gross income calculation,” he continued.
Standard deductions such as the home mortgage deductions, charitable contributions, and medical expenses don’t affect the adjusted gross income calculation. They are deducted from an individual’s tax liability after the individual’s adjusted gross income has been determined. They are considered “below the line” deductions.
Phillips’ lecture Sunday will be about the things an individual can do to lower their adjusted gross income. He has developed a set of tax tips that will help the average taxpayer do tax planning “above the line,” or in other words planning that will affect their adjusted gross income.
“Most of the above the line accounting has to be done through a small business, real estate investing, or some other means. An individual as a W2 wage earner can’t do much to lower their adjusted gross income,” he said.
“There is a particular urgency to lowering one’s adjusted gross income this year, because last year the alternative minimum tax exemption was basically $74,450, and this year people making an adjusted gross income of as little as $45,000 will be faced with alternative minimum tax issues,” he explained.
“The alternative minimum tax was passed in 1969 as a way to insure that the rich paid their fair share and couldn’t eliminate their tax obligations using standard tax rules. It was based on adjusted gross income. Below a certain adjusted gross income, alternative minimum tax doesn’t apply. The problem is the adjusted gross income limits have gone down over the years. I am afraid this same thing will happen with all of the current tax laws that peg a rich person as a single taxpayer with over $200,000 in adjusted gross income, Phillips said.