Finance Foundations: Income Taxes

Introduction

• Learn the fundamentals of income taxes
• What you should know

1. Income Tax Overview

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

2. 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

3. 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

4. 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

5. 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

6. Corporate Income Taxes

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

7. 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

8. 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