Personal Income Tax
Mary B Pearson, CPA
Assistant Professor of Accounting
Topics Discussed:
Filing Status
 Dependent Qualifications
 Sources of Income
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◦ Self Employed Income
Estimated Taxes & Tax Brackets
 Required Receipts
 Itemized Deductions
 Credits
 Education Expenses
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Report What????
Filing Status:
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Single
◦ Never been married, Divorced or Legally
Separated at Dec 31
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Married Filing Joint
◦ Considered married at Dec 31
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Married Filing Separate
◦ Considered married at Dec 31
Head of Household
 Qualifying Widow
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Head of Household
You are unmarried or considered
unmarried at the end of the year.
 You paid more than one half the cost of
keeping up a home for the year.
 A “Qualifying Person” lived with you in
the home for more than half the year.
Exception: school absences, dependent
parent
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Qualifying Widow (er)
Spouse died in prior year, file MFJ
 If you have a dependent child and spouse
died in last 2 years and you have remained
unmarried. You may file with MFJ tax
rates.
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What am I???
Dependent Qualifications
Sources of Income
W-2 Employee Income: Includes
bonuses, tips, commissions, fringe benefits
 Interest & Dividend Income
 State Tax Refunds: Taxable if deducted
as an itemized deduction in a prior year.
 Alimony received, not child support
 Self Employed/Business Income:
Includes child care services, lawn mowing,
purchased research, side income.
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Sources of Income
Capital Gains & Losses: Sale of Assets
 Gains & Losses: Sale of business
property
 IRA/Pension Distributions
 Rental Real Estate Income
 Farm Income
 Unemployment Compensation

Sources of Income
Disability Income: Taxable if the policy
was paid by your employer.
 Social Security Benefits: If you are
single, part of your social security is
taxable if you have taxable earnings are
over $25,000, if married over $32,000.
 Other Income: Jury duty pay, Canceled
Debt Income, Gambling Winnings, Prizes
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Self Employed Income
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Revenue: Report Cash separate from
Credit Card Income
Deductions:
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Advertising
Car & Truck Expenses/Mileage = $.55 per mile
Contract Labor
Repairs to Business Assets
Licenses
Bank Fees
Personal Property Taxes paid
Expense or Depreciate Business Assets
 Computers/Desks/Equipment/Software
Self Employed Income
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Deductions:
◦ Insurances
◦ Interest paid on Credit Cards
◦ Legal and Professional Fees including tax prep
fees and advice
◦ Office Expenses
◦ Rental costs for equipment & property, including
storage shed fees
◦ Travel Costs including meals and lodging
◦ Supplies
◦ Cell Phone & Internet Costs
◦ Business Use of Home

A CPA had just read the story of
Cinderella to his 4 year old daughter
for the first time. The little girl was
fascinated by the story, especially the
part where the pumpkin turns into a
golden coach. Suddenly she piped
up, “Daddy, when the pumpkin turned
into a golden coach, would that be
classed as income or a long-term
capital gain?”
Deductions from Income
Educator Expenses: k-12 teachers
 Health Savings Account
Contributions: Maximum contribution
for Single is $3050, $6150 Family.
Minimum deductible $1200.
 Moving Expenses: Must be closely
related to work, 50 miles from previous
main home, work for 39 weeks
 Alimony Paid

Deductions from Income
IRA Deductions: If covered by a
retirement plan at work, cannot deduct if
AGI is greater than $110,000. Can
contribute $5000, if over 50 $6,000.
 Student Loan Interest: Can deduct up
to $2500 if AGI is less than $75,000
Single, $150,000 MGJ
 Roth IRA: Non Deductible
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◦ Can contribute up to $179,000 MFJ
Estimated Taxes

Required to pay 90% of the required tax
by the due date of the return and the
remaining balance when the return is filed.
(applicable when a 6 month extension is
filed)
Tax Brackets
Tax Rate
Single
Married Filing Joint
10%
$1 - $8500
$1 - $17,000
15%
$8501 - $34,500
$17,001 - $69,000
25%
$34, 501 - $83,600
$69,001 - $139,350
28%
$83,601 - $174,400
$139,351 - $212,300
33%
$174,401 - $379,150
$212,301 - $379,150
35%
Over $379,150
Over $379,150
Required Receipts
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Here are a few things the IRS wants you to know about recordkeeping.
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2. Individual taxpayers should usually keep the following records supporting items on their tax returns for at least three
years:
Bills
Credit card and other receipts
Invoices
Mileage logs
Canceled, imaged or substitute checks or any other proof of payment
Any other records to support deductions or credits you claim on your return
You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the
property. Examples include:
A home purchase or improvement
Stocks and other investments
Individual Retirement Arrangement transactions
Rental property records
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1. Generally, you should keep any and all documents that may have an impact on your federal tax return. It’s a good idea
to have a designated place for tax documents and receipts.
3. If you are a small business owner, you must keep all your employment tax records for at least four years after the tax
becomes due or is paid, whichever is later. Examples of important documents business owners should keep Include:
Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099MISC
Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty
cash slips for small cash payments
Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks
2011 Standard Deductions
Itemized Deductions
Medical and Dental Expenses
 Personal Property Taxes on vehicles are
not deductible in Utah
 Sales Tax vs. State Income Taxes
 Real Estate Taxes
 Mortgage Interest
 Principle Mortgage Insurance Premiums
 Charitable Contributions

Itemized Deductions
Unreimbursed Employee Expenses
 Income Tax Preparation Fee
 Investment Expenses
 Gambling Losses
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Medical and Dental Expenses
Sales Tax vs. State Income Tax
Deduct the higher of sales tax paid or
state and local taxes paid.
 For sales tax deduction, you can use
allocation in table, plus taxes on motor
vehicles.
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Real Estate Taxes
Real Estate Taxes on Real Property
 Registration and Fees paid on personal
vehicles are not deductible because of age
based fee assessed in Utah, not tax.
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Mortgage Interest
Mortgage Interest is deductible on 1st
and 2nd Mortgage or Primary Residence.
 Points are only deductible if paid in the
current year, if financed in loan must
amortize points over life of loan.
 Mortgage Interest on 2nd Home also
deductible.
 Mortgage Insurance Premiums on
Home Acquisition Debt acquired after
2006, also deductible.
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Charitable Contributions
Charitable Contributions
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Out of Pocket Expenses incurred
while giving service to a non-profit
organization:
◦ Travel Expenses while away from home
 Hotel/Lodging/Airfare/Taxi
 Meals deductible only if required to stay overnight.
◦ Actual Car & Truck Expenses or $.14 per mile
◦ Uniforms
Charitable Contributions
Can only take a charitable contribution up
to 50% of your Adjusted Gross Income.
 Cannot deduct the value of a benefit
received. EX: Charitable dinner, must
deduct the value of the meal.
 Cannot deduct value of your time.
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Non Cash Charitable Contributions
Deduct the lesser of Fair Value or
Amount paid.
 Household items, cars, boats, airplanes,
homes, real estate…are deductible
 Can carry over excess contributions to
next five years.
 Must keep records and receipts from
entity donated to prove deduction.
 If over $500 must itemize items
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Unreimbursed Employee Expenses
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Out of Pocket expenses necessary to
maintain current employment position
◦ Unreimbursed Travel Expenses including
lodging, meals, airfare
◦ Licenses
◦ Required Education & Training
◦ Supplies & Assets acquired including
computers & software
◦ Liability/Malpractice Insurance
◦ Subscriptions/Magazines/Professional Dues
Miscellaneous Deductions
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Subject to 2% AGI Floor:
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Unreimbursed Employee Expenses
Income Tax Preparation Fees
Investment Expenses
Job Hunting Expenses
Safety Deposit Box Fees
Not Subject to 2% Floor
 Gambling Losses
 Losses from K-1’s
Credits
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Child & Dependent Care Credit
Retirement Savings Credit: Eligible if
you contribute to a Retirement Account and
AGI is less than $56,500.
Child Tax Credit: $1,000 for each eligible
dependent under the age of 17. AGI cannot
be greater than $130,000 MFJ.
Residential Energy Credit: Windows,
Exterior Doors, Insulation, Energy Efficient
Equipment
Adoption Credit
Earned Income Credit
Maximum Earned Income Credit = $5,751.00 if MFJ
with 3 children and AGI up to $21,800.
See Publication 596 for tables and eligibility at
www.irs.gov
Education Expenses
Item
Education
Amount
Covered
Expenses
Income
Phase Out
American
Opportunity
Credit
4 years of
Post
Secondary
Education
$2,500 per yr
& student
40% of credit
is refundable
Tuition, Fees,
Books, and
Supplies
$180,000 MFJ
$90,000
Single
Lifetime
Learning
Credit
Post
Secondary
$2,000 per
taxpayer
20% of
expenses
Tuition, Fees,
Books, and
Supplies
$122,000 MFJ
$61,000
Single
Tuition &
Fees
Deduction
Post
Secondary
$4,000 per
year
Qualified
Tuition &
Fees
$160,000 MFJ
$80,000
Single/Hof H
Questions & Answers
Personal Income Taxes are due
Tuesday, April 17, 2012
 Filing Period: Three years from the due
date of the return to claim a refund.
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◦ EX: Due date April 17, 2012. You have until
April 15, 2015 to file or amend a 2011 return
for a refund.
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Audit Period: Three previous years tax
returns.