TAXES

1
TAXES

• Money collected by the government and spent
  according to the needs and priorities determined
  by Congress

2
GOVERNMENT REVENUE

• Income Taxes--The largest source of government
  revenue.
• Other taxes providing money to the government
  are
• Social Security Taxes
• Unemployment Insurance Taxes
• Inheritance and Estate Taxes
• Excise Taxes
• Import Duties
• Personal Property Taxes

3
DEFINITIONS OF TAX TERMS

• A WORKING KNOWLEDGE OF TAX VOCABULARY

4
FILING STATUS

• SINGLE
• MARRIED FILING A JOINT RETURN
• MARRIED FILING A SEPARATE RETURN
• HEAD OF HOUSEHOLD
• QUALIFYING WIDOWER WITH A DEPENDENT CHILD

5
EXEMPTIONS

• An allowance claimed for each person dependent on
  the taxpayers income.
• Yourself
• Your Spouse
• Your Children
• If someone else claims you as a dependent, you
  cannot deduct yourself on your return.

6
A DEPENDENT

• A person that lives with you and receives more
  than half their living expenses from you and..
• Must be a relative
• Must be a citizen of the U.S. or resident of
  Canada, Mexico, or an adopted child.
• Cannot file a joint return with someone else
• The dependents income must be less than the
  amount of the exemption.
• You must provide over half the persons support
  during the year.

7
GROSS INCOME

• All taxable income you receive including
• Wages Unemployment
• Tips Alimony
• Salaries Workers Comp.
• Interest Dividends

Not Taxable Child Support, gifts, inheritances,
life insurance benefits and veterans benefits
8
ADJUSTED GROSS INCOME

• Some adjustments, or monies spent, that are
  allowed to be subtracted from gross income.
• IRA contributions can be deducted from gross
  income

Gross income Adjustments Adjusted Gross
Income
9
TAXABLE INCOME

• DEDUCTIONS Expenses the law allows taxpayer to
  subtract from adjusted gross income.
• ITEMIZED DEDUCTIONS Only on the 1040
• Medical and Dental Expenses
• State and Local Taxes
• Property Taxes, Home Mortgage Interest
• Gifts to Charities
• Moving Expenses
• Qualifying Job Expenses
• Misc. Expenses

10
TAXABLE INCOME

• STANDARD DEDUCTION Used instead of the itemized
  deduction. A standard amount deducted from
  Adjusted Gross Income

Gross income Adjustments Adjusted Gross
Income Standard or Itemized Deduction
Exemptions TAXABLE INCOME
11
WHO MUST FILE
12
WHEN TO FILE

• April 15 Of The Year After You Earned the Income
• If April 15 Falls On A Weekend Or Holiday, The
  Form Is Due By The Next Regular Weekday.
• Late Filing Results In Penalties And Interest
  Charges

13
WHICH FORM TO USE?
14
PREPARING TAX RETURNS

• Complete In Ink, Type, Or Generate On The
  Computer
• Many Consumers Hire Tax Preparers Or Accountants
  To Handle Filing For Them
• Computer Software Is Available

1040EZ 1040 1040A