Chapter 12 Planning Your Tax Strategy

1
Chapter 12Planning Your Tax Strategy

• Section 12.2
• Preparing an Income Tax Return

2
Who Must File?

• If you are a citizen of the U.S you are required
  to file a federal income tax return if your
  income is above a certain amount
• There are 5 status categories
• Single (no dependents)
• Married (filing a joint return)
• Married (filing separate returns)
• Head of the household (single with dependents)
• Qualifying widow or widower

3
Deadlines and Penalties

• April 15th (unless that day falls on a Saturday
  or Sunday) then you must file by the next Monday
• If you cannot meet the deadline then you can file
  for an extension
• This delays you filing your return but it does
  not delay your liability, you must send in a
  check for and estimate of what you owe

4
1040EZ

• (simplest tax form to complete)
• Your taxable income is less than 100,000
• You are single or married filing a joint return
• You are under the age of 65
• You claim no dependents
• Your income consists of only wages, salaries, and
  no more of 1500 taxable interest
• You will not file with itemized deductions, claim
  any adjustments to income, or claim taz credits

5
1040A

• You have less that 100,00 taxable income
• You have capital gains distributions but not
  capital gains losses
• You claim the standard deductions
• You claim deductions for IRA contributions
• You claim tax credit for child and dependent
  care, education, adoption, earned income, or
  retirement contributions
• You have deductions for student loan interests,
  educator expenses, or higher education tuition
  fees
• You have no itemized deductions

6
1040

• Expanded version of the 1040A
• This covers income over 100,000 and itemized
  deductions
• Some find this form offer tax advantages because
  you can list more deductions if you have them

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Documents and Info for Filing

• Tax forms and Instruction booklets
• Copies of your old tax returns
• You W-2 Form
• Interest and Dividends (1099-INT or 1099-DIV)

8
Completing the 1040EZ

• Example page 400 5
• We are going to go through and create a practice
  1040EZ for Shirley

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Filing Your Federal Income tax return

• You can mail your paper forms to the IRS
• You can file electronically
• Through a tax professional (Authorized IRS e-file
  provider)
• Tax Software on your own computer

10
Completing Stat Income Tax Returns

• There are 7 states that do not require you to
  file a state tax return
• Alaska, Florida, Nevada, South Dakota, Texas,
  Washington, Wyoming
• In most states tax range from 1 to 10 percent
  based on your adjusted gross income.
• You file your state return at the same time as
  your federal return
• Contact your states department of revenue or tax
  board if you need to find out more about your
  states taxes