You may be entitled to personal exemptions, deductions, and credits that can lower your tax.
Permanently repeal the AMT, the PEP phase-out of personal exemptions, and the PEASE limitation on overall itemized deductions.
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All you need to fill out is your name, personal identification, yearly income and a line for personal exemptions.
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Another change, the limitation on itemized deductions (Pease) and the phaseout of personal exemptions (PEP) would affect less than half.
After Congress acts, employers will have to adjust for changes in tax rates, personal exemptions, inflation and any other provisions.
Under the Tax Code, a NOL results when your tax deductions exceed your taxable income before you deduct your personal exemptions.
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The return of the limitation on itemized deductions (PEASE) and phase out of personal exemptions (PEP) does not appear to have been addressed in the negotiations.
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Two sneaky provisions one limiting itemized deductions for the better-off and the other denying them personal exemptions would also make a comeback, pushing the true top rate to 40.8%.
They include the new 3.8% investment income tax, the new phaseout of personal exemptions and itemized deductions, the deductibility of medical expenses, casualty losses and miscellaneous deductions, and certain tax credits.
That's because an overpayment one year must be included in adjusted gross income the next, which can limit eligibility for the child credit, education credits, a Roth IRA, itemized deductions or even personal exemptions.
It begins with a 15% flat rate, but taxpayers who cross certain income thresholds owe more because of the 3.8% net investment income tax, the Pease limit and the Personal Exemption Phaseout, or PEP, a backdoor increase that limits personal exemptions.
The President is subject to the tax in both years, rendering the phase-out of his itemized deductions and personal exemptions moot because it is his AMT taxable income that will drive his tax liability, and neither the PEASE nor PEP limitation ultimately influence this computation.
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Take dependency exemptions, personal exemption, the earned income credit, the child credit and a few other things and roll them, on a revenue neutral basis, into one single freely transferable credit for each person.
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Imagine the benefits to our economic growth and competitiveness if we had a single 17% rate that when applied to personal income would kick in only after generous exemptions for adults and children.
On the positive side, it would seem that, thanks to the often substantial increase in the basic allowance and the reduction or removal of exemptions, fears that the flat tax reforms would greatly reduce personal-income tax progressivity the notion according to which economic agents should pay higher effective tax rates the more they earn have been overblown.
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