Presentation on theme: "The 1040 EZ. Read the Tax Process article In your notebook, design a graphic that represents the income tax process Share with a neighbor, then merge."— Presentation transcript:
Read the Tax Process article In your notebook, design a graphic that represents the income tax process Share with a neighbor, then merge and revise to design one to present to the class
Income tax – tax on wages, salaries, and self-employed earnings IRS – Internal Revenue Service - The federal agency that collects income taxes in the United States. File a Return - To mail or otherwise transmit to an IRS service center the taxpayer's information, in specified format, about income and tax liability.
Tax Liability- The amount of tax that must be paid Refund - Owed to taxpayer if their tax payments (withholdings) are greater than total tax Tax Evasion - Failure to pay, or a deliberate underpayment of taxes.
Form W-4 - A form that helps an employer determine how much to withhold from an employee's paycheck for federal income tax purposes. An employee completes the form after being hired by an employer. Form W–2 – Wage and Tax Statement - The form that an employer must send to an employee and the IRS at the end of the year. Reports an employee's annual wages and the amount of taxes withheld from his or her paycheck. Form 1099 – Int - The form issued by all payers of interest income to investors at year's end. Form 1099-INT breaks down all types of interest income and related expenses. Payers must issue Form 1099-INTs for any party to whom they paid at least $10 of interest during the year. Form 1040 - The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns. Contains sections that require taxpayers to disclose their financial income status for the year in order to ascertain whether additional taxes are owed or whether the taxpayer is due for a tax refund. 1040 forms need to be filed with the IRS by April 15.financial Form 1040A - A simplified version of the 1040. No itemizing deductions, no business ownership, taxable income of less than $100,000 Form 1040EZ - An alternative to the 1040. Taxable income of less than $100,000, interest income of $1,500 or less, no dependents
You receive a W-2 Form from your employer in January Decide if you should complete a 1040EZ or 1040A or 1040 If your Federal withholding is less than your tax, you make a payment If your Federal withholding is more than your tax, you get a refund Complete and file your tax return by April 15th You earn interest on your savings accounts You work, earn income, and have federal withholding tax deducted and withheld You receive a 1099-INT from your bank in January
Your W-2 Form Receive one from each employer for the year Receive in January Lists your Identification information Employer information Income Withholdings
Box a: Your social security number Box b: EIN Box 1: Your gross wages for the year Box 2: Federal income tax deducted and withheld Box 5: Wages your Medicare deduction is based on Box 4: The Amt of SS Tax withheld.042 (.062) Box 3: Wages your Social Security deductions are based on Box c: Employer’s name and address Box 6: The amt of Medicare tax withheld.0145 If you earn tips Box e: Your info State and local info for your NJ State Income Taxes
Payer’s information Total amount of interest you received from this payer this year Payer’s Tax identificatio n information Your social security number Your info
There are three parts to every W2 form. These parts are actually just copies of your W2, but they are to be sent to different places: Part A which you include with your state tax return Part B which you include with your federal tax return, and Part C which you should keep for your own records If you are self-employed, you will not get a W2. Instead you need to fill out Schedule C or, if you're a farmer, Schedule F.
So what do we do with the W-2 and 1099-Int? We complete our tax return! Where to get a form: Library Tax preparation company H&R Block, other tax preparation company, Certified Public Accountant Electronic tax program Turbotax Online www.irs.govwww.irs.gov