Nick Pettus, CPA & Business Advisors
Cotact us at:
Phone: 626-350-1166 Fax: 626-350-1122
Email: admin@nickpettuscpa.com
4373 Santa Anita Ave, El Monte, CA 91731
Basic Individual Federal Tax Form 1040
The basic Tax form 1040 is broken down into what may be regarded as 12 parts.
From an abstract point of view, as stated below, there is first your gross world wide income including income from all sources, wages, interest, dividends, business, real estate, royalties, pensions, even social security. Following this is where there can be some basic tax planning. These are adjustments to income that can be made usually before the filing date that allows you to adjust down your income because either the income will be taxed later or used for a nontaxable consumption.
Next is both your itemized or standard deduction followed by your exemptions which results in your taxalbe income. Once your tax has been calculated then comes nonrefundable credits taht can reduce your tax down to zero, if your luck. Then comes the dreaded social security tax for self-employed. Notice how it skips basically everything to be added at the bottom of your tax calculations so as to be very hard to eliminate. Finally we come to refundable credits which include monies paid in during the year followed by the Earned Income Credit ( a form of wealth redustribution, notice it wasn't paid in but IS REFUNDABLE), and the American Recovery Act ( also refundable) leading to the net tax due or a refund.
