Individual Tax Reflection

Introduction:

Taxation is a way of increasing government’s revenue by forcing fees on the government units with providing protection to taxpayer’s property. So forcing tax helps to increase the economic growth of the government, and stabilize the price. In addition, the money collected from the taxpayers is very helpful to fund the government to serve the social purposes in their country like funding projects related to health care systems, and education systems. And there are different types of taxations such as income tax, wealth tax, wealth transfer tax, and consumption tax, tariffs and duties tax. In this reflection, I will discuss what I have learned about individual and business taxation in Bus 41563, the challenges that I have faced,

I also learned that there are some limitations on individual income tax and some exemptions and deductions. As individual can claim the standard deductions or the itemized deductions and they have to choose the higher between two of them. The standard deduction is an amount that an individual are allowed to take based on their filing status such us married filing jointly or separately, and filing as head of household.

So the individual taxpayers should differentiate between deduction for adjusted gross income and these are above the line deductions such as health savings account, self-employment tax, tuitions and fees, and alimony paid. And deductions from adjusted gross income and these are below the line deductions such as casualty and theft losses, medical expenses, mortgage interest and investment interest, and the charitable contributions. In addition a personal exemption deduction for each person is $4000 and one personal exemption for a spouse if filing

As there are different business entities such as sole proportion, S corporation, C Corporation and partnership. Each of it has different tax system, and each of them has some advantages and disadvantages. The sole proprietorship is the business entirely owned by one person and it has low cost to establish, but they had full responsibility for whole business debts. However, in partnership which includes two or more partners it protects the partners from the liability of malpractice of other partner. However, the partners under this entity are personally liable for any debts of the business. In C Corporation there are unlimited numbers of stockholders and the profits are taxed separately from its owners. However, C Corporation had double taxation system as first it taxed at the corporate level and then taxed again on individual level after distributing dividends on them.

Challenges that I faced:

I had faced many challenges when studying this course for example; I did not know what the tax means so I had difficulties in solving some problems relating to tax, but after practicing different cases I got sufficient idea about the course and then I realized the differences between various tax types. Also I had some difficulties in finding appropriate information about my parts