Reflection Income Tax

Reflection Income Tax

ReflectionIncome Tax

Taxexemption is a monetary exception which cuts down taxable income.Individuals have to be aware of their tax exemption benefits so thatthey can be able to file their tax returns appropriately. Theexemption of tax for certain benefits such as compensation forinjuries and ailment are reasonable. However, there are certain taxexemptions that are not clear. The waivers given to scholarships andfellowships are said to be limited for students in undergraduateprogram. At the same time they have to be from a non-for profitorganization. This can be quite contradicting as such benefits evenfrom a for profit organization are aimed at helping a student achievetheir educational goals. Besides, companies pay taxes and anydonations may be part of their profits.

Cafeteriaplans portray a notion that, when employees chose cash over nontaxable benefits, they are punished by being taxed. I believe anyform of choice an individual makes should be accepted without anyform of favor or prejudice. Giving this kind of options tend to pushemployees to avoid cash benefits as they will be taxed. This may comeeven when one is in need of the cash.

Flexiblespending plans are another area that is not clearly interpreted. Theuse or lose plan is somehow tricky to comprehend. It is not clear howthe employee agrees to receive lower cash compensation for theemployer to pay given costs without the former recognizing income.The IRS rules that guide this plans are also complex and may bemisinterpreted by employees who lack full knowledge of the plan.Ultimately, the employer must be ready to bring into light all theavailable benefits and exceptions before an employee make theirdecision.