1. Chapter 4: Managing Taxes

2. Objectives Explain how taxes are administered and classified.
Describe the concept of the marginal tax rate.
Determine who should file an income tax return.

3. Objectives
Describe the two ways of paying taxes: payroll withholding and estimated taxes.
Identify the eight planning steps involved in calculating federal income taxes.
Understand planning strategies to legally avoid overpayment of income taxes.
Explain the basics of IRS audits.

4. What is Tax Management? ATTENTION! A PLANNING PROCESS FOR TAX:
Reduction
Deferment
Elimination

5. Administration/Classification of Income Taxes
Federal tax laws
Progressive nature of income tax
Regressive
Marginal tax rate
Effective marginal tax rate
Average tax rate

6. The Progressive Nature of the Federal Income Tax-2009
If your filing status is Single
If your taxable income is:
Over:
But not
over --
The tax is:
Of the
amount
over-- $0
$8,350 %
8,350
33,950
$ %
82,250
4, %
171,550
16, %
372,950
41, %
108, %
The Tax Rate Schedule is shown so you can see the tax rate that applies to all levels of taxable income. It is not used to figure ones’ taxes.

7. The Progressive Nature of the Federal Income Tax-2009
If your filing status is Married filing jointly
If your taxable income is:
Over:
But not
over --
The tax is:
Of the
amount
over-- $0
$16,700 %
16,700
67,900
$1, %
137,050
9, %
208,850
26, %
372,950
46, %
108, %
The Tax Rate Schedule is shown so you can see the tax rate that applies to all levels of taxable income. It is not used to figure ones’ taxes.

8. Who Should File a Tax Return?
STUDENTS WITH:
Earned income
Unearned income
Transfer payments