1040. April 15 th unless that date falls on a weekend or holiday 1040 EZ OR 1040 A OR 1040 Your...
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Transcript of 1040. April 15 th unless that date falls on a weekend or holiday 1040 EZ OR 1040 A OR 1040 Your...
1040
Taxes
April 15th unless that date falls on a weekend or holiday
Individuals Must File Tax Returns By:
Individuals Must FileFederal Tax Returns Using:
1040 EZ OR 1040 A OR 1040
Single Individuals Must File Tax Returns If:Your Total Income is $9,075 (this amount
changes) or more ($6,200 if you are a dependent)Earned IncomeUnearned IncomeOR
Self-Employed & your Total Profit is More Than $400
Wages or salaries CommissionsTipsFringe benefits and stock
optionsPaid Sick, Holiday & Vacation
DaysBonusesHealth & Life InsuranceRetirement ContributionsWorkman’s Compensation
Earned Income is Taxable & Includes:
Earned Income is Generally
Shown on a Form
W-2Or
1099-MISC
Interest from a Savings Account
Interest from BondsDividends from StockGains from Selling
InvestmentsIncome from Rental
PropertyGifts & InheritancePrizesMoney from Retirement
FundRoyaltiesIn-Kind & In-Cash
Transfers
Unearned Income is Taxable & Includes:
1099-INT; 1099-DIV
Nothing
Other 1099 Forms
Moving Expenses if Related to Your Present Job or Starting a New Job
Retirement Account InvestmentsTuition and FeesStudent Loan Interest
Income Adjustments
Money Spent/Invested That Lowers a Tax Payers Total Income
Examples:
Total Income – Income Adjustments
Adjusted Gross Income (AGI)
Who’s a Dependent?
Someone Who Lives with You More Than ½ the Year
&Under 19, or 24 if student
&Did Not Provide Over Half his/her own
Support &
Is Not Filing a Joint Return unless only for a refund
Exemptions—Qualifying ChildFor Tax Purposes?
Tax PayerDependentOver 65Blind
NOTE:Exemptions Lower AGI (Adjusted
Gross Income)
Exemptions Worth $3,950 for 2014 (this amount changes) For Each:
Income is Lowered Also By:Standard Deduction (amounts
change)$6,200 for Single $12,400 for Married Filing JointlyOR
Itemized Deductions—Schedule A
NOTE:Use whichever is Larger
Itemized Deductions-Schedule A-Examples
Medical & Dental Expenses (Limited)Real Estate Taxes PaidVehicle Taxes from RegistrationDonations of Money or GoodsSafe Deposit Box FeesUnion DuesLosses Due to Theft, Vandalism, Fire, Storm
(Limited)Cost of Special Tools, Uniforms, or Protective
Clothing (Limited)Business Use of Home (Home Office)
(Limited)
Tax CreditLower Tax AmountIf Tax Amount is Zero, Can Give a RefundMore Valuable Than
DeductionsYou owe $1,003 in tax. You are eligible for either a $1,000 tax deduction or a $1,000 tax credit. Which would you choose? Tax Credit
Tax Credits are More Valuable Than Deductions-How?
$1000 Deduction—If your Original Income was $9,480, your tax is $1,003
When you deduct the $1000,
$9,480 - $1,000=$8,480 is your new income
Your new tax is $853
so you saved $150 $1003-$853=$150
Tax Credits are More Valuable Than Deductions-How?
$1,000 Credit—These are taken AFTER you calculate your tax
Your tax on $9,480 is $1003
When you take a $1,000 credit
Your new tax is $3 $1,003 - $1,000=$3Which is a savings of $1,000
Tax Credit Examples
Child Care ExpensesAmerican Opportunity Credit for College
Children Under 18 Who Live With You
Home Energy SavingsFirst-Time HomebuyerLower Income Families
National Defense (Wars)Social Security Medicare/Medicaid Interest on the National DebtPresident , Senators and House
RepresentativesAll White House WorkersAgricultureForeign AffairsVeteran BenefitsEnvironmental and Natural Resources
Federal Taxes Used For:
EducationPublic TransportationFire Fighters & Police OfficersRoad & Traffic Light RepairCapitol & Government Building
MaintenanceCongress, Governors, Mayors, State
RepresentativesAll Government WorkersGarbage CollectingHealthy Drinking Water
State & Local Taxes Used For:
How Tax Money is Used
One of Most Controversial Issues For Citizens
Best Way to Voice Opinion
Vote
Created in 191316th Amendment Gave Congress the Power to Tax
Federal Income Tax History
In 1916, Congress changed the text of the income tax law, removing the word "lawful" from "lawful business"
Now ALL income, whether attained by legal means or not, was taxable.
Because of this, many criminals who were guilty of other infractions were sent to prison for tax evasion.
Income Tax Fun Fact
IncomePayroll
Unemployment State & Federal½ of Medicare & Social Security
SalesReal EstatePersonal Property
Types of Taxes
Tax Preparation or HelpCertified Public Accountant (CPA)H & R BlockIRSTax Programs
If you have a professional complete taxes, make sure they sign off on the return.
If they make a mistake, the will at least cover your penalty and interest.
Social Security Administration keeps track of your earnings to determine benefits you will get when retire, become disabled, or die and survivors get.
IRS uses it to identify you
Why Do You Have a Social Security #