JOURNAL 3/8/2016 What are taxes? How are they used? Name one way in which people paying their taxes has influenced your life today.

“Taxes are what we pay for civilized society” Oliver Wendell Holmes Jr., 1904

Taxes Fund Public Goods and Services National Defense State and Local Police Financial Aid Health Care for Elderly Public Education Social Services

Cooking Oil, Foreigners, Slaves (Ancient Egypt) Early Taxes Sales, Inheritance, Imports, Exports (Ancient Rome) Beards, Beehives, Boots, Souls (Russia, 1702) Bachelors (England, 1695; Missouri, 1820)

American Revolution caused debt The Power to Collect Taxes Tax was necessary to pay debt Article 1, Section 8 of the U.S. Constitution granted Congress power to tax

The Federal Government Dollar- Where It Comes From Excise, Customs, Estate, Gift, and Miscellaneous Taxes 7% Personal Income Taxes 43% Social Security, Medicare, and Unemployment and other Retirement Taxes 35% Corporate Income Taxes 7% Borrowing to Cover Deficit 8%

The Federal Government Dollar- Where It Goes Law Enforcement and General Government 3% Social Security, Medicare, and other Retirement 38% National Defense, Veterans, and Foreign Affairs 20% Social Programs 21% Physical, Human, and Community Development 10% Net Interest on the Debt 8%

How Taxes Evolve House Ways and Means Committee Full House Senate Finance Committee Full Senate Joint Conference Committee Senate/House Compromise bill President vetoes bill Tax law enacted President signs bill Veto override fails Veto override passes

Each person is responsible for filing a tax return. Voluntary Compliance

Tax Avoidance versus Tax Evasion Tax Evasion: Failure to pay legally due taxes Tax Avoidance: Legal means of decreasing your tax bill

Information on taxpayer returns is private Taxpayer Rights Taxpayers have the right to appeal an IRS decision

“The income tax law is a lot of bunk. The government can’t collect legal taxes from illegal money.” Al Capone

Tax Forms Federal Tax –W-4 –I-9 –W-2 –1040 –1040A –1040EZ Utah State Tax Form –TC-40

Tax Forms W-4 –Personal Allowance Worksheet –Allows your employer to withhold the correct federal income tax from your pay. W-2 –Shows earnings and tax deductions during the year.

You use W-4 Employee's Withholding Allowance Certificate Form to establish your withholding allowances for Federal income taxes.

W4 Line 5 is where you write your withholding allowances. Usually a number between 0 and 7. Higher # = less $ withheld Lower # = more $ withheld Less chance of tax return. Greater chance of tax return.

An I-9 Form is the Employment Eligibility Verification Form required by the Immigration and Naturalization Services (INS) to verify your identity and your eligibility to work. All employees must complete this form and provide valid original identifications. You are not eligible for pay until Payroll Services receives a satisfactory I-9.

W-2 Form W-2 reflects all taxable wages you received during the calendar year and all taxes withheld from those wages. The form serves as an annual report that enables you to file your personal income tax return with the Internal Revenue Service.

Tax Forms 1040 –Long Form –Used by those with a taxable income of more than $100,000. –Business or Rental Income, Income or losses from selling assets, or itemized deductions.

State & Federal Income Tax

Tax Forms 1040A –Short Form –Used by those with a taxable income of less than $100,000. –Most taxpayers who have dependents, but are not homeowners, use this form.

1040 EZ Similar to the 1040 income tax form, 1040EZ is a faster and easier way to file your taxes. This form is only eligible for people with income less than $50,000 and interest income of $400 or less.