It does matter which parent claims the student as an income tax exemption.
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If the plan for complete state income tax exemption is rejected, there could be alternative proposals, such as a more limited sliding scale of tax breaks.
The reason for the income-tax exemption is obvious: if Texarkana, Arkansas, had to pay the state income tax, residents and business would have even more reason swiftly to move to Texas.
In 1960 only 15% of federal income tax returns had a zero tax liability, due mostly to low taxable income, a standard deduction, the personal exemption, the dependent exemption, and the Earned Income Tax Credit (a direct subsidy to people for being poor).
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These include lower business rates, the ability to reclaim income tax on donations and exemption from capital-gains and inheritance taxes.
In the second scenario, however, we modeled a revenue-neutral plan that eliminated the taxes-paid deduction and municipal bond exemption while lowering income tax rates across the board.
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They will miss the comfortable refuge from default risk, the wealth of noncallable issues, the exemption from state income tax and the dependable benchmark that corporate bond issuers use to price their securities.
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.
Of course, if you live in a state with no income tax, the numbers will change, but that federal exemption is still a big deal.
Despite the agreement of the spouses as set forth in paragraph 13 of the divorce decree, Ms. Defernez claimed a dependency exemption deduction for TDD on her 2007 Federal income tax return.
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This bill was intended to clarify that families of kidnapped children (but only those abducted by strangers) could continue to claim the dependency exemption, child tax credit and the earned income tax credit (EITC).
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One would allow an unlimited exemption for saving, in effect turning the current income tax into a consumption tax.
Hopefully, Congress will agree upon a lower estate tax rate and a higher exemption so middle-class income and other taxpayers are more protected.
Currently, dual-capacity tax treatment allows our energy companies an exemption from U.S. income taxes on the revenue they generate overseas, thus protecting against double-taxation of that foreign income.
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They tell you to check boxes for various tax violations like False Exemption, False Deductions, Multiple Filing, Unsubstantiated Income, Kickbacks, False or Altered Documents, Failure to Pay Tax, Unreported Income, Failing to File Returns, Failing to Withhold, etc.
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The speaker said she will also be supporting state legislation that would provide building owners with a tax exemption, capping their property taxes at a certain percentage of their rental income.
The tax code also includes an "AMT exemption, " which phases out as your income increases.
In practice, experts said, Mr. Perry's 20% tax system likely would appeal to higher-income earners, because of its lower rates and exemption for investment income.
Parents must wade through page after page of rules for the dependent exemption, head of household filing status, the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC), college subsidies, and more.
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