Question

S. Steps to taxable income and tax liability owed What steps should you take when completing a tax return? When preparing a tax return, it is important to complete each step in the order prescribed. Identify each step in completing a tax return by choosing the step from the drop-down fields below. Step A: Determine Adjusted Gross Income Step B: Calculate Taxable Income Larger of itemized deductions or standard deduction Step C: Calculate Tax Liability Calculate tax using tax tables or tax rate schedules

Answer 1

Determine adjusted gross Income	A.      gross income(all income subject to income tax)
	Less
	B.       Specific deduction /Adjustments
	Equals
	C.      Adjusted gross income
	Less:
Step B: Calculate taxable income	larger of itemized deduction or standard deduction
	Less:
	D.            Standard deduction
	Equals:
	E.         Taxable income
Calculate tax liability	Calculate tax using tax tables or tax rate schedule
	Less:
	F.           Credits
	Plus
	G.             Tax Thereon/ total tax liability owed
	Equals:
	H.               Net tax liability