In: Accounting
a) List of income items that are taxed for an individual are as following:
- Salaries and wages
- Any bonus incentive pay
- Dividend income from securities owned
- Gains from sale of securities
- Interest income from money loaned to banks, financial institutions
- Consulting fee or retainer compensation
- An individual’s income from operating a business after deducting the cost of goods sold from gross income.
b) List of items excluded from the calculation of realized income:
- Gifts and inheritance
- Life insurance proceeds
- Social welfare payments
- Payment received for illness, injury or other health related issue
- Interest received from certain municipal, state and federal government bonds.
c) List of deductions and exemptions from the gross income to arrive at the taxable income:
- Home mortgage interest payments
- Educational loan interest payments
- Contributions to charity
- Taxes connected with real estate
- State and local government taxes
- Municipal bond income
d) The following would be the credits:
- Tax refunds
- Tax prepayments including employer withholding taxes from salaries and wages, contractual employment fees
- Credits toward child care, elder care, etc.
- Credit for foreign taxes paid for export of goods/services
Classify the above given data into the following categories
1. IRA Deductions
2. IRA Distributions
3. Tuitions
4. Foreign Tax Credit
Here are the classifications according to categories:-
1. IRA Deductions:-
Home mortgage interest payments
- Educational loan interest payments
- Contributions to charity
- Taxes connected with real estate
- State and local government taxes
- Municipal bond income
2. IRA Distributions:-
- Salaries and wages
- Any bonus incentive pay
- Dividend income from securities owned
- Gains from sale of securities
- Interest income from money loaned to banks, financial institutions
- Consulting fee or retainer compensation
- An individual’s income from operating a business after deducting the cost of goods sold from gross income.
3. Tuitions:-
Gifts and inheritance
- Life insurance proceeds
- Social welfare payments
- Payment received for illness, injury or other health related issue
- Interest received from certain municipal, state and federal government bonds.
4. Foreign Tax Credits:-
- Tax refunds
- Tax prepayments including employer withholding taxes from salaries and wages, contractual employment fees
- Credits toward child care, elder care, etc.
- Credit for foreign taxes paid for export of goods/services