Personal Finance Income Taxes Presented By Mrs. Bowden

Warm Up: Read pp 89-92 and 141- 146. Discuss the picture and the caption on p. 141 List some standard deductions (non taxable income) in your notes

Today we will: Define exemptions, dependents, taxable, nontaxable income, and deductions.

Filing Status: Describes your tax filing group, which is based on your marital status Single Married filing a joint return Married filing a separate return Head of Household Qualified widow(er).

Exemptions: Amount you subtract from your income for each person who depends on your income to live Each exemption reduces your taxable income and so you pay less in taxes You are automatically allowed one unless someone else like a parent is claiming you.

Taxable Income: Equivalent to your gross income minus all deductions and exemptions Includes earned income and unearned income Non taxable income includes – child support, gifts, inheritances, life insurance benefits, veteran’s benefits

Deductions: Standard Deduction – a stated amount that you may subtract from your gross income – it changes each year and is determined by IRS Itemized deductions – a list of deductions that pertain to your specific income and situation Common expenses you can deduct to reduce your tax obligation are: medical and dental, state and local income taxes, property taxes, mortgage interest, charity, losses from theft moving expenses, environmental upgrades to your home

W-4 form: lists your exemptions

I-9 form: gives you the legal right to work – Employee Eligibility Considers your social security number and other forms of identification Proves that you are a legal US Citizen and have the right to work

W-2: Annual summary of all wages and deductions from your pay throughout the year First step to preparing taxes – must be given to you by Jan 31.

W-2: Annual summary of all wages and deductions from your pay throughout the year First step to preparing taxes – must be given to you by Jan 31.

Explain the difference between a W-4 form and a W – 2 form with a neighbor and discuss the types of things that are found on each one. Discuss what an I9 is used for and what tax form 1040ez is used for. Then we will discuss as a class. See p.89-92 and 147