Federal Individual Income Tax Law
The alternative minimum tax is an overly complicated concept because the process is long, and most people do not comprehend the process. The tax mostly affects upper-class people with properties. The alternative minimum tax is complicated because people are required to fill a 54 step AMT form 6251 to ensure that they do not owe the tax. People without adequate information end up messing when filing their tax returns. Other payers are required to fill a 57 step form 8801. The whole procedure is tiresome and overly complicated.
The taxation of social security benefits is complicated because the formula used to calculate the tax is hard to understand. There is also a 20 step worksheet, which is long and tiresome. The fee is deducted from people who earn more than twenty-five thousand dollars. The tax varies in some states, which makes it challenging to keep up with the tax rates. The taxation system is further complicated because the prices keep changing. When a person reaches retirement age, and they wish to continue working, their social security tax becomes higher.
The college tax breaks is another overly complicated tax concept. There are about 14 distinct tax incentives for higher education. The IRS has an 86 page publication and a two-page table containing information on which students are eligible for the loans. The paper also includes details on which tax break is suitable for different families based on their income. The wide array of options ends up confusing the applicants. Most families end up choosing a benefit that they do not qualify for, or an interest that does not save them money. This tax concept is complicated, and most families do not have sufficient information, which leads to more confusion when applying.
The government can make the above taxation concepts simpler by providing adequate information to the public. The application process is long and complicated and might be confusing to some people. The government should simplify the application procedures for the alternative minimum tax and reduce the steps from 54 or 57 levels. The formula for calculating the taxation of social security benefits should be simplified or the public to be educated so that they can familiarize themselves with the method. The imposition of social security should be similar in all states to avoid complications when a person moves from one state to another. The college tax breaks should be grouped into specific categories depending on the family’s monthly income. The government should also reduce the number of options for families to choose from because many options confuse parents and students.