Treasury Letter from 1984

[doug555]

Doug555,

Thank you for the 1040 example and all other info! However, I'm a little confused about the 1040 example and the overall 'math'. Are we conceding SS/Med withholding? Just to be sure I'm understanding this, I'd like to present numbers from one of my W-2 Forms and a simple filing, asking if you can confirm I am 'getting it'. PLEASE correct or instruct me where applicable...

"wages": 46,000 Fed 'income' tax withheld: 6200 FICA (SS/Med) withheld: 2600 standard + personal exemption: 10,000

The following is an extra step of calculating AGI just to illustrate (if correct) my understanding of the the logic behind the RILM deduction...
Adjusted Gross Income before RILM deduction: 36,000 (46,000 Gross Income - 10,000 exemptions)
Line 21 "Other income": -42,200 (AGI RILM of 36,000 + 'income' tax withheld RILM of 6200) <- in reality, ALL of the Gross Income (46K) was RILM.
Adjusted Gross Income after RILM deduction: -6200 (36,000 AGI minus -42,200 RILM)
Taxable Income: 0 Overpayment/Refund: 6200

Basically, this would refund all 'income' withholding and concede FICA because FICA can be perceived as a potential Federal privilege and also does not fall under Subtitle A 'income' tax. Again, please correct/instruct where applicable, and thank you for your patience and knowledge sharing!

Respectfully,

IMM

I cannot follow your calculations... sorry. Just do 1040 as you normally would. Just use Line 21 to include "Other Income" which is the total amount from its attached Schedule.

See post10366 for an example of this Schedule.

Note thereon that Regular & Overtime Pay amounts are Gross amounts. You MUST use your payroll register printouts to do this schedule... not the W2 amounts. Otherwise you cannot pro-rate the amounts correctly.

Please understand: You are NOT getting back any withheld amounts except the Federal Income Tax Withheld (FITW). All the other withheld amounts are valid amounts you must pay for the services received therefrom by contract agreement, now or in the future (Ex: Social Security).

The Online version TaxACT make the 1040 Filing VERY EASY & VERY AFFORDABLE!!! I recommend also getting the Audit Protection package [called: Tax Audit Defense].