2. Steps to determine tax Aa Aa Eight basic steps are used in calculating federa

ID: 2607930 • Letter: 2

Question

2. Steps to determine tax Aa Aa Eight basic steps are used in calculating federal income taxes. 1. Determine your total income. 2. Determine and report your 3. Subtract adjustments to income. 4. Subtract either the 5. Subtract the value of your personal 6. Determine your preliminary tax liability. 7. Subtract the 8. Calculate the balance due the IRS or the amount of your refund. income after subtracting exclusions amount for your tax status or your itemized deductions for which you qualify. Select which term describes each of the following items or parts of the tax return Item Scholarship income spent on course-required tuition or fees Capital gains Contributions to qualified personal retirement accounts (IRAs) An amount that is based on your filing status State and local taxes An amount based on the number of people a taxpayer supports Term

Explanation / Answer

Answer:

1) determine your total income
2) determine and report your gross income after subtracting exclusions
3) subtract adjustments to income
4) subtract either the IRS's standard deduction amount for your tax status or your itemized deductions
5) subtract the value of your personal exemptions
6) determine your preliminary tax liability
7) subtract tax credits for which you qualify
8) calculate the balance due the IRS or the amount of your refund

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Item / Part of tax return

Term

scholarship income spent on course required tuition or fees

income to exclude

Capital gains.

Part of total income.

Contributions to qualified personal retirements account (IRAs).

Adjustments to gross income

An amount that is based in your filling status

State and local taxes.

Included in itemized deductions

An amount based on the number of people a taxpayer supports

Personal exemptions