AFM463 Lecture Notes - Lecture 2: Internal Revenue Code, Filing Status, Debt Relief

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM463
• Professor: Julia Lipiec

Document Summary

Filing status: each us taxpayer files a return using a specific filing status. Each filing status has a different set of tax brackets, rules for deductions, and exemption thresholds. Gross income: all income from whatever source derived , unless a specific exclusion is met as defined in the internal revenue code. Existence of income: three factors in us case law that must be present for income to exist: (1) (2) Net accession to wealth: the taxpayer"s personal b/s has a net increase in wealth. Us citizens are taxed on their worldwide employment income no matter who the income is received from. Includes: salaries, bonuses, commissions, benefits, pension/retirement income, housing costs paid for by employers, cost -of-living allowances, stock option benefits, etc. Employee contributions to us retirement plans are already deducted on the w2. Contributions by a us citizen to a canadian rpp can be deducted on the us return on form 1040, and needs to be disclosed on form 8833.