Reflection on Chapter 9 Taxation


Reflectionon Chapter 9: Taxation

Reflectionon Chapter 9: Taxation

Thechapter comprehensively covers the tax laws for the employees and theself-employed. I understand that the two have different streams ofincome, but all are taxed and considered differently by the taxauthorities. Understanding the difference between the two isparticularly important because to determines the recognition of thetaxable income and the non-taxable incomes. The understanding alsohelps determine the allowable deductions and the non-allowabledeductions for the two categories. I was particularly curious tounderstand these differences because I have an employed brother and aself-employed sister. The chapter was specifically educational forme.

Aftergetting interested in the understanding of the expenses for theemployed person, I realized that they were limited to the jobexperience only. One important thing I learnt is that these expensesare only allowed because they facilitate the employee to workefficiently. Therefore, the tax authority is justified to disallowthe personal expenses for the employee from being deductible in thecalculation of taxable income. For instance, transport expenses arelimited to those that accrued when moving from job site to job site(Murphy&amp Higgins,2014).Now I understand why my elder brother, an employee is cautious whendealing with the tax return forms.

Onthe other hand, business expenses are deductible for the selfemployed people. This is different from the employed people, whosefigure is subject to a 2% AGI floor (Chapter 9 Lecture Notes, 2015).The reason why the expenses are deductible for businesses is becausethey are costs incurred in the line of generating the taxable income.Therefore, the real income that should be taxed should be the net ofthese expenses. This gives the self-employee an upper hand as he orshe is taxed after allowable business expenses. Now, I understand whymy self-employed sister is cautious at separating expenses, andkeeping business expense receipts. In general, the chapter was veryeducational.


Chapter9 Lecture Notes, 2015, TaxesChapter 09, Powerpoint Presentation, fall 2015

Murphy,K., &amp Higgins,M.(2014). Conceptsin Federal Taxation 2015.New York: Cengage Learning