Presentation on theme: "Filing the Income Tax Tell everyone to get a textbook out."— Presentation transcript:
1Filing the Income TaxTell everyone to get a textbook out.
2Taxman by The Beatles Album: Revolver Released: 1966 This is a bitter song about how much money The Beatles were paying in taxes. For every $20 earned, $19 went to the government and Capitol Records. People with high earnings pay exorbitant taxes in England, and as a result, The Beatles - as well as The Who and The Rolling Stones - spent a lot of time in America and other parts of Europe as "tax exiles."George Harrison is quoted as saying, "Taxman was when I first realized that even though we had started earning money, we were actually giving most of it away in taxes."
3TAXMAN BY THE BEATLES - Lyrics Let me tell you how it will be There's one for you, nineteen for me 'Cause I'm the taxman, yeah, I'm the taxman Should five per cent appear too small Be thankful I don't take it all 'Cause I'm the taxman, yeah I'm the taxman If you drive a car, I'll tax the street If you try to sit, I'll tax your seat If you get too cold I'll tax the heat If you take a walk, I'll tax your feet Taxman! 'Cause I'm the taxman, yeah I'm the taxman Don't ask me what I want it for (Ah, Mr. Wilson) If you don't want to pay some more (Ah, Mr. Heath) 'Cause I'm the taxman, yeah, I'm the taxman Now my advice for those who die Declare the pennies on your eyes 'Cause I'm the taxman, yeah, I'm the taxman And you're working for no one but me Taxman!
5Purposes of TaxationTAX: a required payment to a local, state, or national government.Fund public goods and services.Influence behavior. (cigarette. alcohol)Stabilize the economy.Redistribute income.Why do we have taxes?Taxes in US History
7Kinds of Taxes Income tax: income that you earn is subject to tax. Social Security tax: nation’s retirement program; approximately 6% of gross income.Medicare tax: nation’s health care program for elderly and disabled; 1.45% of gross income.Federal income tax is collected by a government agency called the Internal Revenue Service. It is the government’s main source of revenue.S.S. is an insurance program that is sponsored by the federal government and pays benefits. Retirement and Survivors and disability benefits.
8Kinds of TaxesSales tax: tax paid on the value of goods and services. (revenue for state govt.)Excise taxes: included in the price paid by consumers.Fuel = EnvironmentalAlcohol & Cigarettes = Health/SafetyGeneral sales tax is the leading source of revenue for state governments.Excise taxes: fuel, firearms, air transportation, telephone services.
10Internal Revenue Service (IRS) – Collects federal taxes, issues regulations, and enforces tax laws written by the United States Congress
11How does the IRS collect most of your income taxes?
12Income TaxesYour employer will withhold, or take out, income tax from every paycheck and send the money to the government.This way, you don’t have to pay a huge sum at once. This amount varies from person to person.
13How Much is Withheld? Depends on: How much you earn Information you provide on Form W-4 determines how much is withholdPersonal InformationExempt statusAllowances: factors that affect the amount of income tax withholding.
14Do I have to file a return? You are required to file a federal income tax return if:Your income is above a certain amount.You are a citizen or a resident of the United States.You are a U.S. citizen who resides in Puerto Rico.The amount of your income tax return is based on your filing status and other factors, such as your age.
16Must be filed by April 15th Tax Time is Here!Must be filed by April 15thSome people are except from filing, if your money is below a certain amount, etc. However, if you have federal income tax withheld, you should file.
17What Do I Need? (Collecting Forms…) Form W-2: Employer will sendForm 1099-INT: Bank will sendPersonal recordsW-2 shows your total earnings for the year and the total amount of taxes withheld.Make sure all your information is correct when you get this.1099-INT: shows the earned interest on savings during the year.Other 1099 forms are used for reporting earnings on investments.
18What will I be asked? Status: Income Single Married Allowances… Includes interest earnedStatue: single, married…Exemptions: tax laws allow some income to be excused from tax based on the number of people in the household.You’ll need your income from all sources.Itemised: amount actually spent (must use 1040)Standard: set amount
19How can I reduce my taxes to be paid? What things can you “write off of” you taxes?
20Deductions: subtracted from income Charitable ContributionsEducationCasualty, Disaster, and Theft LossesBusiness use of homeBusiness use of carEmployee business expensesStandard vs. Itemized
21Tax credits Subtracted directly from the amount of tax owed. Ex: Energy Star Appliances, Insulation, Roof, Water HeaterTaxable income is different from your gross income because it is the amount after certain deductions.Final calculations: if you have overpaid in taxes for the year, you’ll get a refund, if you’ve underpaid ,you must send the remaining tax to the IRS with your return.Taxable income is different from your gross income because it is the amount after certain deductions.Final calculations: if you have overpaid in taxes for the year, you’ll get a refund, if you’ve underpaid ,you must send the remaining tax to the IRS with your return.
22Options for Filing Income TAX Turbo TaxTax Prep ServiceH&R BlockLiberty Tax ServiceAccountantPaper Forms:1040EZ10401040 A (LONG)
23Do you have a simple tax return? You do if you: Have a filing status of Single or Married Filing JointlyHave no dependents/childrenClaim the standard deductionHave no mortgage paymentHave taxable income of less than $100,000You can use the 1040 EZ!
24Final resultEither you, or your tax preparer, will determine whether you overpaid or underpaid your federal (and state) income taxes.What is the result if you overpaid?What about if you underpaid?How again could you overpay or underpay?