Adjusted gross income is vital because that is what determines a person's tax bracket. It also has a big effect on phase outs, tax exemptions and alternative minimum tax. In other words, adjusted gross income has a lot to do with someone's tax liability.
Orem, UT (PRWEB) March 18, 2013
Tax season creeps up on us every year, and people are caught like a deer in the headlights, wondering how to deal with it. It’s better to do tax planning all year long, but it’s never too late to start.
The Ten Tax Tips course by LegaLees Corporation offers many tax saving solutions that aren’t commonly promoted, even by accountants and tax preparers, but which can make a real difference.
Mr. Phillips teaches, “It's all about adjusted gross income. That is the most important line filled in on the tax form. Adjusted gross income is important because it's what the amount of tax obligation is based on. It is a measure of income used to determine how much of your income is taxable.”
Adjusted gross income, also known as AGI or net income, is calculated on total income from all taxable sources, minus deductions, such as certain business expenses, alimony, medical expenses and certain retirement plan contributions.
Phillips notes, “AGI is becoming more important than ever with the new tax increases. LegaLees is determined to assist taxpayers improve their tax position. Everyone should understand that the best tax tips are the ones that put the taxpayer in a lower tax bracket.”
The majority of tax tips that come out around tax time are so complex or irrational that most people can't use them. Or, many tips deal with standard deductions that have no affect on adjusted gross income. The end result is they don't make that most important number any lower.
The number on the last line of page one of IRS form 1040 is the adjusted gross income. Everything that comes before, such as deductions and additions will determine what the adjusted gross income will be.
While the standard deductions are a part of calculating the amount of tax paid, they have no effect on lowering the tax bracket in the first place. They occur after gross income has been calculated.
Mr. Phillips emphasizes again, “Adjusted gross income is vital because that is what determines a person's tax bracket. It also has a big effect on phase outs, tax exemptions and alternative minimum tax. In other words, adjusted gross income has a lot to do with someone's tax liability.”
In facing the tax deadline, people need to remember that while standard deductions like contributions to charities, personal residence interest and medical expenses can lower the amount of tax paid, they have no affect on adjusted gross income, so they can't move an individual into a lower tax bracket. Yet, it is these deductions that people think about when they want to lower their taxes.
Phillips says that it's important to implement the right tax strategies throughout the year, because it's pretty much too late to lower adjusted gross income when tax time rolls around. About all that's left to lower adjusted gross income at the end of the year is a standard IRA contribution.
Legalees Corporation has now issued Ten Tax Tips that can lower adjusted gross income and put the taxpayer into a lower tax bracket.
You can download these 10 Tax Tips here.
Mr. Phillips serves as a counselor to the Supreme Court of the United States. He is the author of 11 books, along with his latest book Protecting Your Financial Future. He has written hundreds of articles for professional people assisting them in finding various strategies to use the law to protect their property, save taxes and make additional money. He has given addresses at thousands of business seminars. He enjoys helping people apply the law, not only to provide asset protection and estate planning, but to use it to structure businesses and save taxes, helping individuals achieve success.