Question

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 A Less B Equals Less Step B: Calculate Taxable income Larger of itemized deductions or standard deduction Less D Equals E Step C. Calculate Tax Liability Calculate tax using tax tables or tax rate schedules | Less F Plus G Equals

Answer 1

To complete a tax return, one must first calculate adjusted gross income, then determine taxable income, and finally compute tax liability. Tax credits and prepayments are also considered to arrive at the final amount owed or refunded.

Step-by-step explanation:

Steps in Completing a Tax Return:

The process of completing a tax return involves several key steps, which must be taken in a specific order for accurate filing. Here's an outline of these steps:

1. Calculate Adjusted Gross Income (AGI): Add up all sources of income to determine the AGI. This includes wages, interest income, unemployment compensation, and other forms of income.
2. Calculate Taxable Income: Determine whether to take the standard deduction or to itemize deductions, then subtract this amount from the AGI to find your taxable income.
3. Calculate Tax Liability: Using the taxable income, determine the amount of tax owed by applying the appropriate tax rates or using the tax tables or schedules.
4. Subtract Credits and Payments: Deduct any eligible tax credits and prepayments to determine the final tax owed or refund due.

Note that there could be additional steps such as dealing with alternative minimum tax or reporting additional forms of income or deductions. Moreover, tax rates usually increase with income, making the calculation of tax liability progressive in nature.