Like I said above, one of the WTFs is "Meanwhile, you have a 'deduction' -- an amount of money that you're allowed to deduct from your return as if you'd never gotten it in the first place."
So that's deductions. You don't get the money back, you just get to subtract it, as if you'd never earned it in the first place.
How do I calculate these deductions? Well, the first problem is that you will need to keep a bunch of receipts for a couple years, just in case the IRS summons you to account for your deductions. But okay, what receipts should you save?
(1) If you donate to a registered charity, it's as if you never earned the money in the first place. This is the least WTF-y part of this idea.
(2) If you paid medical bills, you are only taxed on the first 7.5% of those bills (wtf?) -- the rest is a deduction. Old wealthy white folks, rejoice.
(3) You also have to pay taxes to your state, because otherwise the 50 states would get into a nasty tug of war over federal money. (But they do this anyway.) These taxes are deductible.
(4) Certain forms of interest (mortgages and investments) might not count in certain cases.
Since that's complicated and is entirely devoted to making rich people pay less tax, there is also a deduction for poor folk like myself who don't want to keep receipts, and that is called your "standard deduction". Standard deductions are also a bit WTF, but less so.
So that's deductions. You don't get the money back, you just get to subtract it, as if you'd never earned it in the first place.
How do I calculate these deductions? Well, the first problem is that you will need to keep a bunch of receipts for a couple years, just in case the IRS summons you to account for your deductions. But okay, what receipts should you save?
(1) If you donate to a registered charity, it's as if you never earned the money in the first place. This is the least WTF-y part of this idea.
(2) If you paid medical bills, you are only taxed on the first 7.5% of those bills (wtf?) -- the rest is a deduction. Old wealthy white folks, rejoice.
(3) You also have to pay taxes to your state, because otherwise the 50 states would get into a nasty tug of war over federal money. (But they do this anyway.) These taxes are deductible.
(4) Certain forms of interest (mortgages and investments) might not count in certain cases.
Since that's complicated and is entirely devoted to making rich people pay less tax, there is also a deduction for poor folk like myself who don't want to keep receipts, and that is called your "standard deduction". Standard deductions are also a bit WTF, but less so.