Gross income – Im Just Sayin http://imjustsayin.net/ Fri, 18 Nov 2022 08:00:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://imjustsayin.net/wp-content/uploads/2021/10/icon-5-120x120.png Gross income – Im Just Sayin http://imjustsayin.net/ 32 32 Adjusted gross income (AGI): what it is, how to determine it https://imjustsayin.net/adjusted-gross-income-agi-what-it-is-how-to-determine-it/ Fri, 18 Nov 2022 08:00:00 +0000 https://imjustsayin.net/adjusted-gross-income-agi-what-it-is-how-to-determine-it/ What is Adjusted Gross Income? Adjusted gross income, or AGI, is your gross income minus certain adjustments. The IRS uses this number as the basis for calculating your taxable income. AGI may also determine the deductions and credits to which you may be entitled. How is adjusted gross income calculated? Adjusted gross income is your […]]]>

What is Adjusted Gross Income?

Adjusted gross income, or AGI, is your gross income minus certain adjustments. The IRS uses this number as the basis for calculating your taxable income. AGI may also determine the deductions and credits to which you may be entitled.

How is adjusted gross income calculated?

Adjusted gross income is your gross income – which includes wages, dividends, alimony, capital gains, business income, pension distributions and other income – less certain payments you made in during the year, such as interest on student loans or contributions to a traditional individual retirement account or a health savings account.

In general, the formula for calculating AGI is to determine your gross income. This includes income from:

  • Certain business expenses.

  • Deductible HSA contributions.

  • Moving expenses for the military.

  • Deductible taxes on self-employment.

  • Contributions to pension schemes or health insurance for the self-employed.

  • Penalties on early savings withdrawals.

  • Deductible IRA contributions.

  • Tuition fees and deductible expenses.

Tax software or your tax preparer will calculate your adjusted gross income as part of the process of preparing your tax return.

Where is AGI on a tax return?

You can find your adjusted gross income directly on your IRS Form 1040. On your federal tax return, your AGI is usually listed on line 11 of your Form 1040.

The importance of adjusted gross income

Your AGI is often the starting point for calculation of your tax account. From there, you will make various adjustments and subtract your allowable deductions to find the amount you will pay tax on: this is your taxable income. You will see the term “adjusted gross income (AGI)” repeated throughout your tax forms.

Your state tax return may also use your federal AGI as a starting point. If you file your taxes onlineyour software will calculate your AGI.

What is your Modified Adjusted Gross Income (MAGI)?

According to the IRS, for most taxpayers, modified adjusted gross income, or MAGI, is simply adjusted gross income before subtracting deductible student loan interest.

If you file Form 1040 and itemize in order to qualify for certain deductions, you may need to calculate your MAGI. It can also be used as a benchmark for determining the level of phasing out of certain credits and tax saving strategies, and sometimes the MAGI formula can depend on the type of tax benefit to which it applies.

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What is Adjusted Gross Income? How to calculate it in 2022 https://imjustsayin.net/what-is-adjusted-gross-income-how-to-calculate-it-in-2022/ Wed, 09 Nov 2022 08:00:00 +0000 https://imjustsayin.net/what-is-adjusted-gross-income-how-to-calculate-it-in-2022/ Adjusted gross income is a tax term that everyone should understand. Also known as AGI, it has ramifications that extend beyond… Adjusted gross income is a tax term that everyone should understand. Also known as AGI, it has ramifications that extend beyond tax season. “People ask you for your adjusted gross income all the time,” […]]]>

Adjusted gross income is a tax term that everyone should understand. Also known as AGI, it has ramifications that extend beyond…

Adjusted gross income is a tax term that everyone should understand. Also known as AGI, it has ramifications that extend beyond tax season.

“People ask you for your adjusted gross income all the time,” says Paul Joseph, attorney and CPA at Joseph & Joseph Tax & Payroll in Williamston, Michigan.

Not only does this affect how much you pay in taxes, but it can also be the basis for decisions about eligibility for assistance programs and loans.

Keep reading for everything you need to know about how AGI is calculated and ways to reduce it.

[READ: Tax Prep Checklist: Collect These Forms Before Filing Your Taxes.]

What is Adjusted Gross Income or AGI?

The IRS defines adjusted gross income as “gross income minus income adjustments”. It’s a number that’s included on your federal tax form, and many states use it for their own income tax calculations.

“Before you take any deductions or credits, you have your AGI,” says Edward Renn, a partner in the private client and tax team at international law firm Withers.

Almost all forms of income – with the exception of interest on municipal bonds – are taken into account in the AGI. There is also a long list of exclusions to the AGI. These are items that can be deducted to reduce a person’s adjusted gross income. Income and exclusions are specified on the Schedule 1 tax form.

Why is AGI important?

Your AGI is important for several reasons:

Taxable income: Your AGI is not the same as your taxable income, but it is the basis for determining this figure. Once your AGI is calculated, subtract a standard or itemized deduction to get your taxable amount. The lower your AGI, the lower your taxes will be. Where applicable, qualifying business income and charitable contributions may also be deducted to reduce taxable income.

Detailed deductions: If you use a Schedule A to itemize your deductions, AGI will determine the amount of certain expenses you can deduct. Specifically, there are the following limitations:

— Only medical and dental expenses above 7.5% of the AGI can be deducted.

— Deductions for charitable contributions are generally limited to 60% of AGI, although there may be lower limits in some cases.

— Only eligible damage and loss costs above 10% of the AGI can be deducted.

Program Eligibility: The AGI is also used to determine eligibility for certain tax credits and assistance programs. For example, the free application for federal student aid, known as FAFSA, asks the AGI to determine eligibility for student grants and loans.

How to calculate the AGI?

The AGI is calculated as follows:

Salaries, wages, tips + other income = gross income – adjustments to income = AGI

“Changes are usually going to be made in Schedule 1,” Renn says.

For 2021, there were 25 additional income categories that must be added when calculating gross income. They include, among others, the following:

– Business income.

– Unemployment benefits.

— Gambling income.

— Cancellation of the debt.

– Stock options.

Then, under income adjustments, there are two dozen categories that can be excluded, including:

— Educator’s fees.

— IRA deduction.

— Deduction of interest on student loans.

— Moving expenses of members of the armed forces.

— Health savings account deduction.

Many tax software programs make it easy to determine which additions and exclusions apply to your income. A tax preparer can also make sure you have calculated your AGI correctly.

[Read: How to File Taxes.]

What are examples of tax adjustments?

The income adjustments included in Schedule 1 mean a dollar-for-dollar reduction in what will ultimately be your taxable income.

“Let’s say you earn a salary of $50,000 and put $5,000 in a retirement account,” says Brian Copeland, partner and director of financial planning at Hightower Wealth Advisors in St. Louis, Missouri. Assuming the contribution is to a traditional 401(k), IRA, or similar account, this would drop a taxpayer’s AGI to $45,000.

Once your AGI is calculated, several other deductions can be made before you reach your taxable income. These include in particular the following:

— Flat-rate or itemized deduction.

— Charitable contributions of up to $300 for single taxpayers or $600 for married couples filing jointly, if the standard deduction is claimed.

— Deduction for eligible business income.

The resulting taxable income is used to determine the amount owed to the government. Taxpayers who are entitled to credits, such as the child tax credit or the earned income tax credit, can apply them to their tax bill to reduce the amount owing.

Find your adjusted gross income

If you’re looking for AGI from a previous year, it shouldn’t be hard to find. You will need a copy of your tax return, then look for it on Form 1040. The layout of the form sometimes changes, but for 2021 the AGI is on line 11.

You may also be wondering how to check your withholding tax to see if your employer is collecting the correct tax payments for your AGI. In this case, check a pay stub to see year-to-date totals for tax deductions and other payroll deductions. If you don’t have a payslip, contact your company’s human resources department.

How can I reduce the AGI?

This is a recurring question from taxpayers: how do I reduce my taxable income before the end of the year?

“Retirement is the best way to give it up,” Copeland says. Workers can contribute up to $20,500 to a 401(k) account in 2022 or $6,000 to an IRA. People aged 50 and over can make additional catch-up contributions. Within these limits, all contributions made to traditional retirement accounts will reduce a person’s AGI and therefore their taxable income.

Retirees have an additional way to reduce their taxes by making qualified charitable distributions, called QCDs. At age 72, the government orders retirees to start taking the required minimum distributions from traditional retirement accounts. This money is added to your taxable income, but not if you use it for a QCD. “If you donate to charity through a QCD, that reduces income before the AGI,” says Copeland.

QCDs must be sent directly from a retirement fund to the charity to be eligible for the tax benefit, so consult a financial professional if you are unsure of the process.

Other ways to reduce AGI include contributions to health savings accounts, paying off interest on student loans, or deducting expenses related to qualifying rental properties.

There’s little downside to lowering your AGI, and it shouldn’t affect your Social Security benefits, according to Renn. However, some lenders may consult your AGI when reviewing loan applications.

“It could impact your ability to borrow money,” says Joseph.

However, Renn notes that if lenders find that your AGI is low due to large pension contributions, it may not affect your application’s chances of being approved. In this case, they may assume that you can interrupt these contributions to make loan repayments, if necessary.

[READ: How Remote Work Could Affect Your Income Tax.]

What is the difference between AGI and Modified Adjusted Gross Income, or MAGI?

While AGI is important, Modified Adjusted Gross Income may be more important for those seeking assistance through programs such as Medicaid or the government health insurance marketplace.

“A lot of times it’s the modified AGI that’s taken into account,” says Renn.

Known as MAGI, Modified Adjusted Gross Income is calculated by adding certain deductions back to the AGI. For example, student loan interest and half of the self-employment tax are added to the AGI to determine the MAGI.

“A lot of people have the same number as both,” Copeland says.

This is because the deductions added to the AGI to create the MAGI are relatively rare. Still, it’s important to know this number because it not only affects eligibility for certain government programs, but also whether you’re able to contribute to Roth retirement accounts.

More US news

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What is Adjusted Gross Income? How to calculate it in 2022 originally appeared on usnews.com

Update 10/11/22: This story was published at an earlier date and has been updated with new information.

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What is Adjusted Gross Income (AGI) and Modified Adjusted Gross Income (MAGI)? – Forbes Advisor https://imjustsayin.net/what-is-adjusted-gross-income-agi-and-modified-adjusted-gross-income-magi-forbes-advisor/ Fri, 28 Oct 2022 16:18:00 +0000 https://imjustsayin.net/what-is-adjusted-gross-income-agi-and-modified-adjusted-gross-income-magi-forbes-advisor/ Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors. Your adjusted gross income is exactly what it sounds like. This is your gross income, which is the money you earn before taxes and payroll deductions, minus certain adjustments. You will most […]]]>

Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

Your adjusted gross income is exactly what it sounds like. This is your gross income, which is the money you earn before taxes and payroll deductions, minus certain adjustments. You will most often encounter AGI when filing your taxes.

It plays a vital role in determining the tax credits or deductions you can claim on your tax return. Generally, if your AGI is too high, you will not be eligible for tax deductions such as the student loan interest deduction, education credits, and certain itemized deductions. Your AGI also determines your tax bracket and how much you will pay in income taxes.

The median U.S. AGI is $43,614, according to the most recent data from the IRS, which is from the 2018 tax year.

Here’s what you need to know about your AGI and why it’s so important.

What is Adjusted Gross Income?

AGI is defined as your gross income minus certain adjustments. Your gross income only includes income subject to tax, such as:

  • Wages
  • Dividends
  • business income
  • Other types of income, such as capital gains and retirement distributions

To calculate your AGI, you may be able to subtract certain expenses from your gross income, including:

  • Educator expenses
  • Interest on student loans
  • Alimony
  • Contributions to a retirement account

Your AGI will never be greater than your total gross income reported on your tax return; usually it is less than your gross income. However, if you are not entitled to any deduction, your AGI may be equal to the total amount of your gross income. You can find your AGI on line 11 of your Form 1040.

How to Calculate Adjusted Gross Income (AGI)

To calculate your AGI, you must first start with your gross income, which is any income you receive subject to tax. You will then need to subtract your adjustments from your total gross income to calculate your AGI.

Add the gross income subject to tax:
  • business income
  • Rental income
  • Salary, wages and tips
  • Unemployment benefits
  • Taxable state refunds
  • Taxable social security
  • Dividends
  • Interest
  • Net disposal of assets
  • IRA Distributions
  • Pensions and annuities
  • Other income, such as alimony received
Minus any adjustments:
  • Charitable donations
  • Educator expenses
  • Moving expenses
  • Deductible taxes on self-employment
  • Health savings account deduction
  • Self-employed health insurance
  • Child support paid
  • Tuition and Fee Deduction
  • Early penalty on savings withdrawals
  • Other adjustments
Total IGA Total gross income subject to tax less total adjustments

Adjusted gross income (AGI) and modified adjusted gross income (MAGI): what’s the difference?

Modified Adjusted Gross Income (MAGI) is slightly different from AGI. Unlike your AGI, which is a number, your MAGI may differ depending on the tax credit or deduction you are trying to claim. But like the AGI, it can determine any tax deductions or credits you may be entitled to on your tax return.

Generally, your MAGI is your AGI adjusted for certain expenses and income. Typically, your MAGI calculation is your AGI with student loan interest added. However, the IRS may calculate your MAGI differently depending on the tax credit or deduction.

Here are some examples of how MAGI determines certain tax deductions and credits:

Premium tax credits: Your MAGI for premium tax credits and other tax savings for Marketplace Health Insurance (“Obamacare”) is your AGI plus any untaxed foreign income, non-taxable Social Security benefits, and exempt interest of tax.

Child tax credit: Your MAGI for child tax credit and child tax credit advance payments is your AGI plus certain sources of foreign income.

The U.S. Opportunity Tax Credit: Your MAGI for US Opportunity Tax Credit is your AGI plus certain sources of foreign income.

For many taxpayers, their MAGI total is the same or very close to their AGI, since the adjustments some taxpayers make will only slightly change the final number.

Tax deductions and credits calculated using your AGI or MAGI

After determining your AGI or MAGI, you can choose which tax deductions or tax credits you can claim on your tax return. Here are the main tax credits and deductions depending on your AGI or MAGI.

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You can retire well with 50% of your gross income https://imjustsayin.net/you-can-retire-well-with-50-of-your-gross-income/ Sun, 09 Oct 2022 09:00:00 +0000 https://imjustsayin.net/you-can-retire-well-with-50-of-your-gross-income/ When it comes to planning for retirement, people take different approaches: Some do nothing at all, leaving their fate to chance. Others pay diligent attention, plan young, while saving early and often. The rest hides somewhere in between. Despite all their differences, the supporters of each of these approaches have at least one thing in […]]]>

When it comes to planning for retirement, people take different approaches: Some do nothing at all, leaving their fate to chance. Others pay diligent attention, plan young, while saving early and often. The rest hides somewhere in between.

Despite all their differences, the supporters of each of these approaches have at least one thing in common: everyone would benefit, or at least be reassured, by doing a financial health check with a retirement savings expert.

On the choices people have for funding any shortfalls that may arise in retirement, Ian Kennedy, co-founder of the Pensions Support Line, says: “There are many options, such as rental income from investment property or savings in a bank. or post office.

“Most aim to make up for this shortfall by contributing to a pension throughout their working lives because of the generous tax breaks available. The sooner you can start contributing to a pension, the better. Even if it means you can only save a small amount each month. This is because the longer you leave it on, the more expensive it becomes. Ian Kennedy advises aiming for a retirement income of around 50% of your gross pre-retirement income. This is a good rule of thumb for income to aim for in retirement.

Kennedy says, “If you’re making $47,000 a year on your retirement day, $23,500 would be an appropriate number to aim for. Now, if you received a full state pension of €12,900 per year [figure correct pre Budget 23 announcement] this would leave a shortfall of €10,600 per year.

For someone who wants to build a pension fund of around €260,000, which would yield a pension of around €10,600 a year, Kennedy gives clear advice. He says the attached chart shows what a person would need to save each month to reach their retirement savings goal, at age 68.

While the cost of living crisis is doing us a disservice on a daily basis, it is also banishing savings plans from many. According to a Pension Awareness Week survey conducted by Behavior & Attitudes (B&A) and published in September this year, this is the reason given for Irish people without a pension either delaying the start of a pension , or postpone the date of their chosen retirement. .

Anyone thinking of postponing should perhaps skip to the next paragraph now. Not everyone will want to know that early retirement can be a mortality risk factor. That’s the sobering conclusion of a study published in the Journal of Epidemiology and Community Health. It found that working just one extra year past retirement age reduced the risk of death (over the 18-year study period) by 9-11%, regardless of health status.

That we really need to talk about pensions is clear from the findings of the B&A survey, in which nearly two-thirds of 25-49 year olds surveyed admitted they find the subject of pensions “too complicated to understand”. Among those aged 35 to 49 surveyed, the prospect of saving for retirement was low, with 72% saying they were financially wiped out after essential bills were paid.

Hope did not feature prominently in the study, in which 38% of respondents said they “already know” that they will not have enough savings as they approach retirement.

This figure was echoed in a study published by the Competition and Consumer Protection Commission (CCPC) in recent weeks, where 38% of respondents said they did not have a pension in place.

The reasons given were myriad: 20% said they were “too young” and a similar percentage said they “couldn’t afford it”. 32% said they had “not yet managed to get started”. Unfortunately, the study also highlights the great distance that can elapse between planning to get there and actually carrying it out: among the 55 to 64-year-olds interviewed as part of the CCPC survey, 23% declared n have no pension in place. Some thought the state would deliver, with 77% expecting to be entitled to a contributory pension from this source on retirement. Tellingly, only 32% of respondents knew how much the state pension amounted to per week.

Retirement means different things to different people. For some, this may mean working methodically or even sporadically through a to-do list. For others, it may mean the dream of pursuing new hobbies or spending more time doing what you love.

For Fonz Scanlan, financial planner and wealth manager at Money Smart, a “good retirement” does not necessarily mean being young and wealthy when you retire: “It means you have the ability to step back when it suits you. . , into a life that continues to be enjoyable and meaningful,” he says.

Then emphasizing that “having a large nest egg gives you the opportunity to choose the type of retirement you want”, he continues: “The only way to build up this nest egg is to spend less than what you earn and to invest the difference, throughout your professional life if possible.

“While excess income should go to a pension from a tax efficiency standpoint, life is for living and the central goal of good financial planning is to strike the right balance between saving and spending. throughout life.

“That’s why we should all try to imagine how we’re going to spend our retirement years and, long before retirement, plan a lifestyle that we can realistically support financially.” On the subject of the number of us who consider retiring with state pensions alone, Fonz Scanlan says: “In January this year, the CSO reported that a third of the working population has no retirement coverage apart from the state pension.

Advising that this is very worrying because it is extremely difficult to live solely on the full state pension, he continues: “And you may not be entitled to the full amount. Also, you could be 67 or 68 by the time you get it, which could take several years after you want or can work.

“Although this figure is decreasing with automatic enrollment, there remains the problem of those with some form of private pension and savings who do not have enough for a comfortable retirement.

“It’s not just because a lot of people just can’t afford the big savings. It’s also because many of us underestimate how long we’ll live and how much we’ll want to spend in retirement.

“Health and well-being often improve with early retirement, not to mention free time. With all of this comes the desire to see new places and try new things – which means spending more.

“Then later in retirement, when travel expenses come down, there may be escalating medical and care bills that may not be covered by your health insurance. There is only one way to prepare for retirement and that is to save.

“Take a little pain now – cutting spending to create a surplus – to avoid a lot more pain in retirement.”

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Husband refuses to share gross income details. Wife gets it via RTI https://imjustsayin.net/husband-refuses-to-share-gross-income-details-wife-gets-it-via-rti/ Thu, 06 Oct 2022 07:00:00 +0000 https://imjustsayin.net/husband-refuses-to-share-gross-income-details-wife-gets-it-via-rti/ A person cannot refuse to share generic details of his net taxable income/gross income with his wife in cases where marital disputes are involved. In a recent order, the Central Information Commission (CIC) ordered the Income Tax Department to inform the petitioner of the generic details of her husband’s taxable net income/gross income within 15 […]]]>

A person cannot refuse to share generic details of his net taxable income/gross income with his wife in cases where marital disputes are involved. In a recent order, the Central Information Commission (CIC) ordered the Income Tax Department to inform the petitioner of the generic details of her husband’s taxable net income/gross income within 15 days.

Details relating to assets, liabilities, tax returns, details of investments, loans and borrowings, etc. fall under the category of personal information. In accordance with Article 8(1)(j) of the RTI Act, such personal information is entitled to protection against unwarranted intrusion. However, the Supreme Court has already ruled in the case CPIO, Supreme Court of India v Subhash Chandra Agarwal (20210) that “conditional access is available when the stipulation of a broader public interest is satisfied”.

The case

Appellant Sanju Gupta had filed an ITR request for details of her husband’s gross income in fiscal years 2018-19 and 2019-20, and his taxable income.

However, the Central Public Information Officer (CPIO), Department of Income Tax Office of the Income Tax Officer, Bareilly, denied providing any details under the right to information. information (RTI) after failing to obtain her husband’s consent. The CPIO had asked Gupta’s husband if the information could be released.

Unhappy with the CPIO’s decision, Gupta filed another appeal to the First Appeal Authority (FAA). The FAA order, however, upheld the CPIO’s decision. Gupta then filed a second instant appeal to the CIC.

Also Read: LIC Policy: Legal Heirs Not Entitled to Request Details of Policyholder’s Plan and Agent – CIC Order

Previous

The CIC has reviewed some of its own orders and past judgments from the Supreme Court and High Courts.

In Vijay Prakash v. Union of India (2009), the Delhi High Court observed that in private disputes, the “basic protection afforded under the (disclosure) exemption enacted under Section 8(1)(j) cannot be lifted for disturbed.

In the Rahmat Bano case, the CIC allowed the disclosure of the gross income to the ex-wife on the grounds of the subsistence and livelihood of the family.

In Rajesh Ramachandra Kidile v Maharashtra SIC and Others, the Bombay High Court (Nagpur Bench) observed: “In a dispute, where the issue at issue is maintenance of the wife, information relating to the details of salary does not remain plus the category of personal information about both husband and wife, which is available with the husband and therefore accessible by the wife.

Read also: A tenant leaves his apartment without paying rent. Can the owner find their current address via RTI? CIC decides

order

Taking into account previous judgments and orders of the higher courts, the CIC ordered the CPIO to “inform the appellant of the generic details of her husband’s net taxable income/gross income held and available from the public authority”

“The Board directs the CPIO to provide the Husband’s “Generic Net Taxable Income/Gross Income Details” for the specified period as set out in the RTI Application to the Appellant, free of charge, within 15 days of from the date of receipt of this order,” CIC said in its order dated September 19, 2022.

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AGI explained and tax tips to reduce your adjusted gross income https://imjustsayin.net/agi-explained-and-tax-tips-to-reduce-your-adjusted-gross-income/ Wed, 05 Oct 2022 15:00:00 +0000 https://imjustsayin.net/agi-explained-and-tax-tips-to-reduce-your-adjusted-gross-income/ What is Adjusted Gross Income? And what are the ways to control it? Notre Retirement Daily’s Robert Powell sat down with Jeffrey Levine, CPA and tax expert at Buckingham Strategic Wealth Partners, to answer these questions and more. Watch the video interview above or read the video transcript below. TurboTax Live experts are watching over […]]]>

What is Adjusted Gross Income? And what are the ways to control it?

Notre Retirement Daily’s Robert Powell sat down with Jeffrey Levine, CPA and tax expert at Buckingham Strategic Wealth Partners, to answer these questions and more.

Watch the video interview above or read the video transcript below.

TurboTax Live experts are watching over you. An expert helps you: get help as you go or submit your taxes. You can talk live to online tax experts for unlimited answers and advice OR have a dedicated tax expert do your taxes for you, so you can have confidence in your tax return. Enjoy up to $20 extra off when you start with TurboTax Live.

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After husband refuses to disclose gross net income, wife in Delhi files RTI https://imjustsayin.net/after-husband-refuses-to-disclose-gross-net-income-wife-in-delhi-files-rti/ Tue, 04 Oct 2022 07:00:00 +0000 https://imjustsayin.net/after-husband-refuses-to-disclose-gross-net-income-wife-in-delhi-files-rti/ Unusual circumstances forced a wife to request information under the Right to Information (RTI) Act to find out more about her husband’s annual salary. Sanju Gupta, the petitioner, recently filed a request from RTI for information about her husband’s income because he had consistently refused to disclose the information to her without providing any justification. […]]]>

Unusual circumstances forced a wife to request information under the Right to Information (RTI) Act to find out more about her husband’s annual salary. Sanju Gupta, the petitioner, recently filed a request from RTI for information about her husband’s income because he had consistently refused to disclose the information to her without providing any justification.

Initially, the Central Public Information Officer (CPIO) of the Income Tax Department, located in Bareilly, refused to comply with a request for information from RTI. The husband objected to it, which is the cause.

Sanju Gupta then appealed to the First Appeal Authority (FAA), according to the story seen on India.com. The FAA, according to the article, upheld the CPIO’s order, prompting Gupta to submit a second appeal to the CIC.

On September 19, 2022, the CIC (Central Information Commission) issued an order after reviewing some of its previous Supreme Court and High Court orders and decisions.

The commission instructed the Central Public Information Officer (CPIO) to give the wife information on her husband’s net gross income which was accessible to the relevant authority within 15 days of receiving it.

The report went into more detail. In particular, a person can be ordered to disclose his salary information to the wife in the event of a marital disagreement.

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This is not income! | REIT adjustments under Section 481(a) not taken into account Gross Income | law of the free man https://imjustsayin.net/this-is-not-income-reit-adjustments-under-section-481a-not-taken-into-account-gross-income-law-of-the-free-man/ Mon, 03 Oct 2022 17:07:29 +0000 https://imjustsayin.net/this-is-not-income-reit-adjustments-under-section-481a-not-taken-into-account-gross-income-law-of-the-free-man/ Mark Twain once said, “Buy land, they don’t do any more.” It is perhaps this sentiment (along with investment returns) that has led to the popularity of real estate investment trusts. However, taxpayers should be aware of the various requirements and restrictions associated with real estate investment trusts, such as income and asset thresholds. Based […]]]>

Mark Twain once said, “Buy land, they don’t do any more.” It is perhaps this sentiment (along with investment returns) that has led to the popularity of real estate investment trusts. However, taxpayers should be aware of the various requirements and restrictions associated with real estate investment trusts, such as income and asset thresholds. Based on a recent private letter ruling, the Internal Revenue Service (“IRS”) noted that certain income (Section 481 adjustments) related to a real estate investment trust would not constitute a gross income and, therefore, would violate the income limits of Section 856.(c)(2) and (3) of the Internal Revenue Code.

Real estate investment trusts, generally

Generally, real estate investment trusts (“REITs”) are corporations that own, finance and/or operate income-producing real estate. REITs provide investment opportunities for shareholders to derive income from real estate without personally buying and/or operating properties. However, to qualify as a REIT, a company must meet several requirements. Section 856(a) of the Internal Revenue Code defines a REIT as a corporation, trust, or association:

(1) Which is managed by one or more directors or administrators;

(2) whose beneficial ownership is evidenced by transferable shares or transferable beneficial interest certificates;

(3) Which (but for the provisions of this part) would be taxable as a domestic company;

(4) that is neither (A) a financial institution (see Section 582(c)(2)), nor (B) an insurance company (see Sub-Chapter L);

(5) beneficially owned by 100 or more persons;

(6) Subject to the provisions of subsection (k), which is not closely held (see subsection (h)); and

(seven) Which meets the requirements of subsection (c).[1]

Section 856(c) describes the limits applicable to qualifying REITs. REITs must file with their returns an election to be a REIT (or at least have made that election in a previous tax year).[2] In addition, REITs must meet certain income and asset thresholds. Section 856(c)(2) and (3) describe the income limits as follows:

(2) at least 95% (90% for taxation years beginning before January 1, 1980) of its gross income (excluding gross income from prohibited transactions) is derived from:

(A) dividends;

(B) interest;

(VS) real estate rents;

(D) gain from the sale or other disposition of stocks, securities and real property (including interest on real property and interest on mortgages on real property) that are not property described in Section 1221(a)(1);

(E) property tax abatements and refunds;

(F) income and gains from seized property (as defined in sub-paragraph (e));

(G) amounts (other than amounts the determination of which depends in whole or in part on a person’s income or profits) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on immovable property or on interests in immovable property or (ii) to buy or rent immovable property (including interest on immovable property and interest on mortgages on immovable property);

(H) gain from the sale or other disposition of real property that is not a prohibited transaction solely by virtue of Section 857(b)(6); and

(I) mining royalty income earned in the first taxation year commencing after the date of enactment of this paragraph on real estate owned by a timber real estate investment trust and held, or formerly held, in the course of trade or of the timber production business by such real estate real estate investment trust;

(3) at least 75% of its gross income (excluding gross income from prohibited transactions) is derived from:

(A) real estate rents;

(B) interest on bonds secured by mortgages on real estate or on interests in real estate;

(VS) gain from the sale or other disposition of real property (including interest on real property and interest on mortgages on real property) that is not property described in section 1221(a) (1);

(D) dividends or other distributions on, and gains (other than gains from prohibited transactions) from the sale or other disposition of transferable shares (or transferable beneficial interest certificates) in other trusts investment properties that meet the requirements of this Part;

(E) property tax abatements and refunds;

(F) income and gains from seized property (as defined in sub-paragraph (e));

(G) amounts (other than amounts the determination of which depends in whole or in part on a person’s income or profits) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on immovable property or on interests in immovable property or (ii) to buy or rent immovable property (including interest on immovable property and interest on mortgages on immovable property);

(H) gain from the sale or other disposition of real property (other than a non-qualifying REIT debt obligation offered to the public) that is not a prohibited transaction solely by virtue of section 857( b)(6); and

(I) qualifying temporary investment income[.][3]

Further, with respect to income threshold determinations, Section 856 provides the Secretary with the authority to exclude certain types of income from Sections (c)(2) and (3). Specifically, Section 856(c)(5)(J)(i) provides, in part, that:

(J) Power of Secretary to Exclude Other Items of Income.—To the extent necessary to achieve the purposes of this Part, the Secretary is authorized to determine, solely for the purposes of this Part, whether any item of income or gain who-

(I) does not otherwise qualify under subsection (2) or (3) may be deemed not to constitute gross income for the purposes of subsection (2) or (3) . . . .[4]

Private letter decision 202235006

On September 2, 2022, the IRS issued a Private Ruling Letter (“PLR”) regarding a taxpayer’s request for a ruling, in part, under Sections 856(c)(2), (3) and (5)(J )(i).[5] The main facts presented are as follows:

The taxpayer was organized as a government limited liability company in year 1 when the taxpayer elected to be taxed as a real estate investment trust (REIT) under [S]ections 856 to 860. The taxpayer’s overall method of accounting is an accrual method, and its taxation year is the calendar year. The taxpayer has been a partner in OP, a partnership for federal income tax purposes, for all periods beginning in Year 1. The taxpayer’s income is derived almost exclusively from his investment in OP[6]. . . .

After acquiring a majority interest in OP (including indirectly through the acquisition of Taxpayer) in Year 2, Taxpayer conducted a review of Taxpayer’s books and records. The taxpayer concluded that OP improperly depreciated or amortized certain cell and broadcast towers. . . brought into service between the tax years ended Date 1 and Date 2 [] using cost recovery methods applicable to personal property. As a result of this review, OP submitted Forms 3115, Request for Change in Accounting Policy, . . . to change its methods of accounting for depreciation for the [a]ssets to methods applicable to land improvements in asset class 00.3 of Rev. proc. 87-56, 1987-2 CB 674, beginning with the tax year of the change ending on date 3. . . . The [m]method [c]changes have had positive effects [S]adjustments under section 481(a) [] that the Taxpayer will take into account on the [S]section 481(a) adjustment period. Appropriate [S]The section 481(a) adjustment period will generally be the year of the changeover and the following three taxation years, unless an acceleration applies later in certain specified circumstances.[7]

Based on the limited facts presented, the IRS has concluded, in part, as follows:

Based on all facts and circumstances, excluding the taxpayer’s share of OP Section 481(a) adjustments, determined pursuant to [S]Section 1.856-3(g), of the taxpayer’s gross income for purposes of [S]Sections 856(c)(2) and (3), do not interfere with the policy purposes of Congress in enacting income tests under those provisions. Accordingly, based on the information submitted and representations made, we determine that pursuant to [S]Section 856(c)(5)(J)(i), the taxpayer’s share of the OP Section 481(a) The adjustments, so determined, shall not constitute gross income for purposes of [S]section 856(c)(2) and (3).[8]

Conclusion

Notably, the Internal Revenue Service has stated that Section 481(a) adjustments would not be considered for purposes of Section 856(c)(2) and (3). This decision is important for several reasons. First, it reaffirms the underlying concern that a REIT’s gross income should be comprised primarily of passive income. Second, he notes that a section 481(a) adjustment is not qualifying income under sections 856(c)(2) and (3). Finally, it highlights the authority of the Secretary to disregard certain income for purposes of Section 856(c)(2) and (3). This fact can be crucial for some taxpayers who are on the edge of the Section 856(c) income limits. Taxpayers in these situations may be well served by submitting a ruling request in the form of a private letter.

[1] See IRC § 856(a).

[2] See IRC § 856(c)(1).

[3] IRC § 856(c)(2), (3).

[4] IRC § 856(c)(5)(J)(i).

[5] Private IRS Ltr. Rule. 202235006 (September 2, 2022).

[6] OP is an independent owner of properties consisting of multi-tenant communications towers, distributed antenna system arrays, and other communications-related real estate such as land parcels and rooftop sites. OP’s core business is the rental of space on and at these sites to a diverse group of tenants in different industries. Identifier.

[7] Identifier. In addition, the Taxpayer made certain other representations which are not reproduced here.

[8] Identifier.

[View source.]

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Husband refuses to share details of gross income/net taxable income. Wife Gets It Via RTI – Here’s How https://imjustsayin.net/husband-refuses-to-share-details-of-gross-income-net-taxable-income-wife-gets-it-via-rti-heres-how/ Mon, 26 Sep 2022 11:20:36 +0000 https://imjustsayin.net/husband-refuses-to-share-details-of-gross-income-net-taxable-income-wife-gets-it-via-rti-heres-how/ A person cannot refuse to share generic details of his net taxable income/gross income with his wife in cases where marital disputes are involved. In a recent order, the Central Information Commission (CIC) ordered the Income Tax Department to inform the petitioner of the generic details of her husband’s taxable net income/gross income within 15 […]]]>

A person cannot refuse to share generic details of his net taxable income/gross income with his wife in cases where marital disputes are involved. In a recent order, the Central Information Commission (CIC) ordered the Income Tax Department to inform the petitioner of the generic details of her husband’s taxable net income/gross income within 15 days.

Details relating to assets, liabilities, tax returns, details of investments, loans and borrowings, etc. fall under the category of personal information. In accordance with Article 8(1)(j) of the RTI Act, such personal information is entitled to protection against unwarranted intrusion. However, the Supreme Court has already ruled in the case CPIO, Supreme Court of India v Subhash Chandra Agarwal (20210) that “conditional access is available when the stipulation of a broader public interest is satisfied”.

The case

Appellant Sanju Gupta had filed an ITR request for details of her husband’s gross income in fiscal years 2018-19 and 2019-20, and his taxable income.

However, the Central Public Information Officer (CPIO), Department of Income Tax Office of the Income Tax Officer, Bareilly, denied providing details under the right to information. information (RTI) after failing to obtain her husband’s consent. The CPIO had asked Gupta’s husband if the information could be released.

Unhappy with the CPIO’s decision, Gupta filed another appeal to the First Appeal Authority (FAA). The FAA order, however, upheld the CPIO’s decision. Gupta then filed a second instant appeal to the CIC.

Also Read: LIC Policy: Legal Heirs Not Entitled to Request Details of Policyholder’s Plan and Agent – CIC Order

Previous

The CIC has reviewed some of its own orders and past judgments from the Supreme Court and High Courts.

In Vijay Prakash v. Union of India (2009), the Delhi High Court observed that in private disputes, the “basic protection afforded under the (disclosure) exemption enacted under Section 8(1)(j) cannot be lifted for disturbed.

In the Rahmat Bano case, the CIC allowed the disclosure of the gross income to the ex-wife on the grounds of the subsistence and livelihood of the family.

In Rajesh Ramachandra Kidile v Maharashtra SIC and Others, the Bombay High Court (Nagpur Bench) observed: “In a dispute, where the issue at issue is the maintenance of the wife, the information relating to the details of salary does not remain plus the category of personal information about both husband and wife, which is available with the husband and therefore accessible by the wife.

order

Taking into account previous judgments and orders of the higher courts, the CIC ordered the CPIO to “inform the appellant of the generic details of her husband’s net taxable income/gross income held and available from the public authority”

“The Board directs the CPIO to provide the Husband’s “Generic Net Taxable Income/Gross Income Details” for the specified period as set out in the RTI Application to the Appellant, free of charge, within 15 days of from the date of receipt of this order,” CIC said in its order dated September 19, 2022.

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This is not income! | Section 481(a) REIT adjustments are not taken into account Gross Income – Fund Management/ REITs https://imjustsayin.net/this-is-not-income-section-481a-reit-adjustments-are-not-taken-into-account-gross-income-fund-management-reits/ Wed, 14 Sep 2022 11:50:58 +0000 https://imjustsayin.net/this-is-not-income-section-481a-reit-adjustments-are-not-taken-into-account-gross-income-fund-management-reits/ Mark Twain once said, “Buy land, they don’t do any more.” It is perhaps this sentiment (along with investment returns) that has led to the popularity of real estate investment trusts. However, taxpayers should be aware of the various requirements and restrictions associated with real estate investment trusts, such as income and asset thresholds. Based […]]]>

Mark Twain once said, “Buy land, they don’t do any more.” It is perhaps this sentiment (along with investment returns) that has led to the popularity of real estate investment trusts. However, taxpayers should be aware of the various requirements and restrictions associated with real estate investment trusts, such as income and asset thresholds. Based on a recent private letter ruling, the Internal Revenue Service (“IRS”) noted that certain income (Section 481 adjustments) related to a real estate investment trust would not constitute a gross income and, therefore, would violate the income limits of Section 856.(c)(2) and (3) of the Internal Revenue Code.

Real estate investment trusts, generally

Generally, real estate investment trusts (“REITs”) are corporations that own, finance and/or operate income-producing real estate. REITs provide investment opportunities for shareholders to derive income from real estate without personally buying and/or operating properties. However, to qualify as a REIT, a company must meet several requirements. Section 856(a) of the Internal Revenue Code defines a REIT as a corporation, trust, or association:

(1) Which is managed by one or more directors or administrators;

(2) whose beneficial ownership is evidenced by transferable shares or transferable beneficial interest certificates;

(3) Which (but for the provisions of this part) would be taxable as a domestic company;

(4) that is neither (A) a financial institution (see Section 582(c)(2)), nor (B) an insurance company (see Sub-Chapter L);

(5) beneficially owned by 100 or more persons;

(6) Subject to the provisions of subsection (k), which is not closely held (see subsection (h)); and

(seven) Which meets the requirements of subsection (c).1

Section 856(c) describes the limits applicable to qualifying REITs. REITs must file with their returns an election to be a REIT (or at least have made that election in a previous tax year).2In addition, REITs must meet certain income and asset thresholds. Section 856(c)(2) and (3) describe the income limits as follows:

(2) at least 95% (90% for taxation years beginning before January 1, 1980) of its gross income (excluding gross income from prohibited transactions) is derived from:

(A) dividends;

(B) interest;

(VS) real estate rents;

(D) gain from the sale or other disposition of stocks, securities and real property (including interest on real property and interest on mortgages on real property) that are not property described in Section 1221(a)(1);

(E) property tax abatements and refunds;

(F) income and gains from seized property (as defined in sub-paragraph (e));

(G) amounts (other than amounts the determination of which depends in whole or in part on a person’s income or profits) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on immovable property or on interests in immovable property or (ii) to buy or rent immovable property (including interest on immovable property and interest on mortgages on immovable property);

(H) gain from the sale or other disposition of real property that is not a prohibited transaction solely by virtue of Section 857(b)(6); and

(I) mining royalty income earned in the first taxation year commencing after the date of enactment of this paragraph on real estate owned by a timber real estate investment trust and held, or formerly held, in the course of trade or of the timber production business by such real estate real estate investment trust;

(3) at least 75% of its gross income (excluding gross income from prohibited transactions) is derived from:

(A) real estate rents;

(B) interest on bonds secured by mortgages on real estate or on interests in real estate;

(VS) gain from the sale or other disposition of real property (including interest on real property and interest on mortgages on real property) that is not property described in section 1221(a) (1);

(D) dividends or other distributions on, and gains (other than gains from prohibited transactions) from the sale or other disposition of transferable shares (or transferable beneficial interest certificates) in other trusts investment properties that meet the requirements of this Part;

(E) property tax abatements and refunds;

(F) income and gains from seized property (as defined in sub-paragraph (e));

(G) amounts (other than amounts the determination of which depends in whole or in part on a person’s income or profits) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on immovable property or on interests in immovable property or (ii) to buy or rent immovable property (including interest on immovable property and interest on mortgages on immovable property);

(H) gain from the sale or other disposition of real property (other than a non-qualifying REIT debt obligation offered to the public) that is not a prohibited transaction solely by virtue of section 857( b)(6); and

(I) qualifying temporary investment income[.]3

Further, with respect to income threshold determinations, Section 856 provides the Secretary with the authority to exclude certain types of income from Sections (c)(2) and (3). Specifically, Section 856(c)(5)(J)(i) provides, in part, that:

(J) Power of Secretariat to Exclude Other Items of Income.-To the extent necessary to achieve the purposes of this Part, the Secretary is authorized to determine, solely for the purposes of this Part, whether any item of income or gain who-

(I) does not otherwise qualify under subsection (2) or (3) may be deemed not to constitute gross income for the purposes of subsection (2) or (3) . . . .4

Private letter decision 202235006

On September 2, 2022, the IRS issued a Private Ruling Letter (“PLR”) regarding a taxpayer’s request for a ruling, in part, under Sections 856(c)(2), (3) and (5)(J )(i).5 The main facts presented are as follows:

The taxpayer was organized as a government limited liability company in year 1 when the taxpayer elected to be taxed as a real estate investment trust (REIT) under [S]ections 856 to 860. The taxpayer’s overall method of accounting is an accrual method, and its taxation year is the calendar year. The taxpayer has been a partner in OP, a partnership for federal income tax purposes, for all periods beginning in Year 1. The taxpayer’s income is derived almost exclusively from his investment in OP6. . . .

After acquiring a majority interest in OP (including indirectly through the acquisition of Taxpayer) in Year 2, Taxpayer conducted a review of Taxpayer’s books and records. The taxpayer concluded that OP improperly depreciated or amortized certain cell and broadcast towers. . . brought into service between the tax years ended Date 1 and Date 2
[] using cost recovery methods applicable to personal property. As a result of this review, OP submitted Forms 3115, Request for Change in Accounting Policy, . . . to change its methods of accounting for depreciation for the [a]ssets to methods applicable to land improvements in asset class 00.3 of Rev. proc. 87-56, 1987-2 CB 674, beginning with the tax year of the change ending on date 3. . . . The [m]method [c]changes have had positive effects [S]adjustments under section 481(a) [] that the Taxpayer will take into account on the [S]section 481(a) adjustment period. Appropriate [S]The section 481(a) adjustment period will generally be the year of the changeover and the following three taxation years, unless an acceleration applies later in certain specified circumstances.seven

Based on the limited facts presented, the IRS has concluded, in part, as follows:

Based on all facts and circumstances, excluding the taxpayer’s share of OP Section 481(a) adjustments, determined pursuant to [S]Section 1.856-3(g), of the taxpayer’s gross income for purposes of
[S]Sections 856(c)(2) and (3), do not interfere with the policy purposes of Congress in enacting income tests under those provisions. Accordingly, based on the information submitted and representations made, we determine that pursuant to [S]Section 856(c)(5)(J)(i), the taxpayer’s share of the OP Section 481(a) The adjustments, so determined, will not constitute gross income for purposes of [S]section 856(c)(2) and (3).8

Conclusion

Notably, the Internal Revenue Service has stated that Section 481(a) adjustments would not be considered for purposes of Section 856(c)(2) and (3). This decision is important for several reasons. First, it reaffirms the underlying concern that a REIT’s gross income should be comprised primarily of passive income. Second, he notes that a section 481(a) adjustment is not qualifying income under sections 856(c)(2) and (3). Finally, it highlights the authority of the Secretary to disregard certain income for purposes of Section 856(c)(2) and (3). This fact can be crucial for some taxpayers who are on the edge of the Section 856(c) income limits. Taxpayers in these situations may be well served by submitting a ruling request in the form of a private letter.

Expert tax lawyers

Need help filing a ruling request by private letter? Contact us as soon as possible to discuss your rights and ways we can help with your representation.We handle all types of cases, including cases involving PLRs. Schedule a consultation today!

Footnotes

1.
See IRC § 856(a).

2.
See IRC § 856(c)(1).

3. IRC § 856(c)(2), (3).

4. IRC § 856(c)(5)(J)(i).

5. Private IRS. Lt. Rule. 202235006 (September 2, 2022).

6. OP is an independent owner of properties consisting of multi-tenant communications towers, distributed antenna system arrays, and other communications-related real estate such as parcels of land and rooftop sites. OP’s core business is the rental of space on and at these sites to a diverse group of tenants in different industries. Identifier.

seven.
Identifier. In addition, the Taxpayer made certain other representations which are not reproduced here.

8.
Identifier.

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