Commentary, news and
reflections about
this taxing life, by Vernon Jacobs, CPA.
this taxing life, by Vernon Jacobs, CPA.
Jacobs is the co-author of Legal Ways to Save Taxes Offshore & Onshore, of Offshore Tax Strategies, of The Controlled Foreign Corporation Tax Guide and of Risk Management for Amateur Investors. He is the Editor & Publisher of the International Wealth Protection Monitor newsletter and the free Q&A service, the Jacobs Report on International Financial Planning. He is the President of Offshore Press, Inc. and is a member of the International Tax Technical Resource Panel of the American Institute of CPAs. He has been a CPA since 1962, with a focus on taxes since 1975. .
Less Income Is Better
Than More Deductions
Taxpayer Smith has $50,000 of income and
$10,000
of deductions. Taxpayer Jones has $40,000 of income and no deductions.
Even
though their net income is equal, Jones is likely to pay less taxes
than Smith.
If the income is from wages or self employment, there will be less social security taxes for Jones. Employee benefits have the same effect. If you can elect to participate in an employee salary reduction cafeteria plan, it's usually beneficial. Getting a company car with a reduced salary is better than getting a car allowance. Other employee benefits are worth more than an equal amount of wages.
Everyone is entitled to a certain amount of "standard deductions" even though their actual deductions may be far less than the standard deduction. Some types of income (like social security) are subject to greater taxes at higher income levels. Some deductions are more limited at higher income levels - like medical expenses and employee deductions.
And, the higher the taxpayer's income and deductions, the more likely the deductions will be eliminated by the alternative minimum tax.
by Vernon Jacobs, CPA
Co-author of Legal Ways to Save Taxes Offshore & Onshore
http://www.offshorepress.com/legalways2save.htm
| Contact Information: Email jacobs1@kc.rr.com. Phone
913-362-9667, Fax 913-432-7174, U.S. mail to POB 8194, Prairie Village,
Kansas, 66208. www.vernonjacobs.com |
Jacobs is the co-author of Legal Ways to Save Taxes Offshore & Onshore, with J. Richard Duke, JD, LLM.
