Recently there have been many questions raised about the tax increase provisions of Initiative 1098 in the press. This blog post will attempt to answer some basic questions about Initiative 1098. If you have any other questions about the initiative, please email me at email@example.com.
First, you can find the text of Initiative 1098 here.
What Does Initiative 1098 Tax?
Initiative 1098 imposes an “excise tax” on federal adjusted gross income above certain dollar thresholds.
What Is Adjusted Gross Income?
You can determine your adjusted gross income by looking at the bottom of the first page of your Form 1040. Adjusted gross income is gross income with certain adjustments, such as trade or business deductions. See Section 62 of the Internal Revenue Code. Adjusted Gross Income is income before the standard exemptions and before the standard or itemized deductions.
Will The Initiative 1098 Taxes Be Deductible For Federal Income Tax Purposes?
It is unclear at this point whether Initiative 1098 taxes will be deductible for federal income tax purposes. The federal income tax law does not allow a generalized deduction for state excise taxes. It does allow a deduction for state income tax purposes. The question is whether for federal income tax purposes this is an excise tax or an income tax. This question will not be definitively answered until after the law comes into effect.