FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Explain further the steps in determining the income tax.

The following needs to explain further the steps in determining the income tax.
Use the space provided for your answer.
Step 1 is to identity the taxpaying party or "entity to which the tax computation formula applies.
Step 2 is to determine the taxpayer's "gross income".
Step 3 is to determine the expenses and certain other items that can be "deducted" in computing the
taxpayer's "taxable income".
Step 4 is to apply the appropriate "tax rate" to the taxpayer's taxable income to find the "tax due".
Step 5 is to subtract any applicable "tax credits/payments" from the taxpayer's tax due in finding the "tax
payable".
Step 6 is to increase the tax by "penalties and interests" to obtain the "total amount payable".
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Transcribed Image Text:The following needs to explain further the steps in determining the income tax. Use the space provided for your answer. Step 1 is to identity the taxpaying party or "entity to which the tax computation formula applies. Step 2 is to determine the taxpayer's "gross income". Step 3 is to determine the expenses and certain other items that can be "deducted" in computing the taxpayer's "taxable income". Step 4 is to apply the appropriate "tax rate" to the taxpayer's taxable income to find the "tax due". Step 5 is to subtract any applicable "tax credits/payments" from the taxpayer's tax due in finding the "tax payable". Step 6 is to increase the tax by "penalties and interests" to obtain the "total amount payable".
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