Finance Foundations: Income Taxes

Course details

Filing your personal or professional income taxes in the US can be an overwhelming task. Accounting and finance professors Jim and Kay Stice can make filing this year's taxes a bit easier for you by explaining basic taxation concepts and terminology—and providing valuable tips to save money when it comes to tax planning. In this course, they cover concepts such as taxable income, tax brackets, average and marginal tax rates, tax withholding, deductions, and credits, and explain the motivation behind federal tax deductions such as mortgages, dependents, and charitable giving. They review the steps involved in filing a personal income tax return, explain the benefits of legitimate (legal) tax planning, and address some of the special issues that corporations and small businesses face in filing returns.

NOTE: The information in this course applies only to the United States.

Topics include:
Determine the most advantageous tax treatment of credits and deductions.
Explore the history of certain tax breaks.
Identify the reasons for including personal information on a federal tax return.
Define the most beneficial method to shift income from one pocket to the other for income tax purposes.
Examine the ways to avoid the double taxation on corporate income.
Explain legal issues involved in hiding income from taxing authorities.

Concepts

Introduction

Learn the fundamentals of income taxes
What you should know

Income Tax Overview

The history of income taxes
Different kinds of taxes
How many sets of books does a large company keep

A Simple Income Tax System

Taxman by the Beatles
Tax brackets
Average and marginal tax rates
Tax deductions and tax credits
Ordinary income and capital gains income

Common Tax Loopholes and General Income Tax Policy

Who gets tax breaks
Examples of individual tax breaks
Examples of business tax breaks
The biggest individual tax loopholes in the US tax code
The biggest corporate tax loopholes in the US tax code
What is the optimal income tax rate
The relationship between tax revenues and spending

Completing a Basic Tax Return

Della and Dee Stice doing people's taxes
Joint Form 1040 - Entering personal information
Joint Form 1040 - Computing adjusted gross income (AGI)
Joint Form 1040 - Computing the total tax
Joint Form 1040 - Additional tax payment or tax refund
Itemized deductions
Single Form 1040 - Computing Adjusted Gross Income (AGI)
Single Form 1040 - Additional tax payment or tax refund
Online tax returns

Principles of Tax Planning

Tesla and tax planning
What is tax planning
Strategy 1 - Shift income from one time period to another
Strategy 2 - Shift income from one pocket to another
Strategy 3 - Change the character of the income

Corporate Income Taxes

How large are corporate income taxes
Ownership structure - Sole, partnership, and corporation
Corporate income tax issues
Multinational corporate income tax issues

Income Taxes - Planning vs. Evasion

Reporting foreign income on US income taxes
Tax evasion - Beware of illegal strategies, part 1
Tax evasion - Beware of illegal strategies, part 2

Common Income Tax Issues for Small Businesses

Tax issues at a family grocery store
Common tax issues for small businesses, part 1
Common tax issues for small businesses, part 2
Is your goal to minimize your income taxes

Review and Conclusion

Taxes can be complex, but you have the basic tools
Concluding income tax advice