Essay Sample on $2000 Motel Reimbursement: Homeowner's Policy vs Tax Code

Introduction

Reimbursement is defined as a repayment of money that one has already spent. An example in this question is the money that the homeowner's policy will repay Mr. and Mrs. Appleton. Section 61 of the tax code conditions that gross revenue includes all income, irrespective of where it came from unless exempted by law. Similarly, expenses incurred by an individual due to casualty are not deductible. That is, payment for accommodations (in this case, $2000 for a motel) due to the destruction of an individual's residence destruction is not deductible (Brownlee, 2016). So if it is taxed, it will be like paying double tax. However, some of the reimbursement money is taxable depending on the guidelines by IRS expense reimbursement; there two types of accountable and no accountable.

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Advantages of Filing a Joint Return

Claiming more deductions and credits

Filing returns jointly entitles couples to certain credits like lifetime learning credit, also deductions of interest for qualified educational loans. This kind of credit is only available for married individuals that file taxes together. This would, therefore, save and reduce their taxable income.

It saves time, and it is cheap

Getting professional taxes done can be expensive; thus, doing one joint return is cheaper as it saves on cots. It also does not consume time like doing two separate tax returns for different people. This would give individuals time to concentrate on other things that may be equally important. Thus, it helps in saving time and money.

Less tax owed

When individuals do tax returns separately then add the total for the married couples, the amount is higher that of doing joint return filling. For joint replacements, relief is given to the couple, unlike when they would have accounted for the tax separately. Therefore, the couple is subject to paying lass tax.

Offer for retirement options.

Filing jointly offers a better retirement plan for couples. This is in cases like when one of the couple losses his/her job shortly, they are still able to keep some of the retirement contributions. Note that such donations are not allowed for married individuals who file their tax returns separately.

Risks of Filing a Joint Tax Return

Shared responsibility

When married individuals decide to file tax returns jointly, it means that they are both responsible for all information given when filing tax, thus when one of the spouses does something shady financially or lies about what they are reporting when filing taxes, they will both be held responsible.

Delinquent payment for spouse debts

When filing joint returns and it happens that one of the spouses has debts like students' loans or child support, a government agency will probably devour any of your refund checks. This, therefore, increases the liability that is placed on the joint income and thus ends up earning less due to the deductions.

Limitation of miscellaneous deductions

Joint returns increase the total taxable income of the couple. This raises the level of the income above the 2% that is provided for miscellaneous deductions. Therefore, the couple would not be able to access this relief. Were they to do separately, the chances of getting the deductions would have been high because the individual taxable income would have reduced. Therefore, the couple is a disadvantage and has to miss out on this.

References

Brownlee, W. E. (2016). Federal Taxation in America. Cambridge University Press.