Originally posted by Dan....
(Not to be taken as tax advice, but only as an example of how deductions, exemptions and credits can be very helpful)
Example:
Let's say your gross income (1040, line 38) is $70,000
Let's say your itemized deductions total $15,000
You claim 6 exemptions (you, your spouse, and all 4 children)on line 6d on IRS1040 6 x 3200 =19,200
70,000-15000-19200 = $35,800 This is your taxable income.
Accoring to the IRS tax table (
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf ) your tax is $ 4644. (This assumes that you do not have to add other taxes, such as self employment or capital gains)
Then, assuming your children are young and live with you, you get to subtract an additional $4000.00 as a child tax credit. (Line 52 of 1040. Make sure you check with the 1040 instructions, pg 41 on Child Tax Credit to verify that you qualify) This makes your tax now
$644.00
[Edited on 2-21-2006 by Dan....]