Federal Income Tax Education

I am providing this information for anybody who has a desire to learn the truth, has patience and perseverance, pays meticulous attention to detail, and wants to keep the money(money is considered property) that they have received for their labor.

Specifically this info applies only to those individuals that have money withheld(W-4) from their paycheck, and receives a W-2(information return) from their employer, and files a 1040 Form.

Disclaimer: I am not a tax consultant, CPA, or any other titled professional associated with tax advice. This is for educational purposes only.

Down the hole we go, where the rubber meets the road. The following links provide evidence that your income may not be taxable, but as mentioned above you must persevere.

First we will start with the imposition of the tax:

1. Tax Imposed:

(a) Married individuals filing joint returns and surviving spouses
There is hereby imposed on the taxable income of -...

If you look closely at the link below you will see that in Sec.1. (a) thru (d), that the tax that is imposed is only on taxable income and nothing else. They list several different types of individuals but the tax is not imposed on them, its only on their taxable income.
Here is the link go take a quick look and then come right back.

http://www.fourmilab.ch/ustax/www/t26-A-1-A-I-1.html

So what is Taxable Income and how is it computed?

(a) In general
Except as provided in subsection (b), for purposes of this subtitle, the term "taxable income" means gross income minus the deductions allowed by this chapter (other than the standard deduction).

http://www.fourmilab.ch/ustax/www/t26-A-1-B-I-63.html

So taxable income is Gross Income minus deductions. Well what is gross income and how is it computed? Here is the definition: (go look and come right back)

http://www.fourmilab.ch/ustax/www/t26-A-1-B-I-61.html

The code here lists 15 items in the definition and only 2 of them (1) and (4) apply to me, other items may apply to you.

From this point on I will only be discussing item (1) referred to directly above which addresses:

(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;

specifically: Compensation for services.

Subchapter B, Part II lists 20 items specifically included in gross income. If you follow the link below it shows Sec. 71. thru Sec. 90., and the one that addresses Compensation for services is Sec. 83. My income does not include things like alimony, annuities, services of child, or any of the other sections, just Sec. 83.

http://www.fourmilab.ch/ustax/www/t26-A-1-B-II.html

Sec. 83. is titled Property transferred in connection with performance of services and says the following:

(Note: I have highlighted below the key word phrases in this section in order to get the point across and edited out further below the restriction clauses in that section so you don't get caught up with their intent to confuse you with their legaleze:

(a) General rule
If, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of -

(1) the fair market value of such property (determined without regard to any restriction other than a restriction which by its terms will never lapse) at the first time the rights of the person having the beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier,

over
(2) the amount (if any) paid for such property, shall be included in the gross income of the person who performed such services in the first taxable year in which the rights of the person having the beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever is applicable. The preceding sentence shall not apply if such person sells or otherwise disposes of such property in an arm's length transaction before his rights in such property become transferable or not subject to a substantial risk of forfeiture.

Here is the link:

http://www.fourmilab.ch/ustax/www/t26-A-1-B-II-83.html

Yes now there is a mouth full, lets break it down.
(Note I have edited out the restrictive clauses below for clarity)

If, in connection with the performance of services, property is transferred to any person, the excess of -, the fair market value of such property, over, the amount (if any) paid for such property, shall be included in the gross income of the person who performed such services.

Now when you read this without the parenthetic restrictions you can see that only the excess amount paid (if any) over the fair market value paid to you shall be included in your gross income.

So what is the fair market value of the services you performed for your employer? It is the salary or wages that you negotiated with your employer when you initially started working for them, any increases in your pay would also be included as your employer for whatever reason decided that your value to him or her has increased.

In other words you are only being paid the fair market value for your services performed and since there is nothing in excess of that amount you would not include that FMV amount in your Gross Income.

I could and probably should go on here, but I will wait for any further clarifications needed, good luck with your patience and perseverance.