Taxes for Teens for Mrs Miller’s Seniors Using the IRS “1040EZ” Form

In this lesson, you will learn Who can file the 1040EZ form, What a W-2 form is, and How to file the 1040EZ form.

What is tax money used for? Bridges Road maintenance Research Education Armed services, national defense, veterans, and foreign affairs Retirement income for elderly Social programs Physical, human, and community development Law enforcement Interest on the national debt

Voluntary Payroll Deductions Health Insurance Retirement Savings

Required Payroll Deductions By law, employers must pay taxes deducted from employee paychecks. The most common taxes are federal and state, and sometimes cities have their own local taxes. In addition, employees have to pay a Social Security Tax (FICA), and Medicare tax contribution with each paycheck.

Mandated taxes: Social Security The Social Security tax is also called the FICA tax. (Federal Insurance Contributions Act) Social Security taxes provide the following benefits for employees and their dependents: • retirement benefits • benefits for the dependents of retired workers • benefits for the disabled and their dependents

Medicare The Medicare tax is used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65. Irs.gov

W4 You use W-4 Employee's Withholding Allowance Certificate Form to establish your withholding allowances for Federal income taxes. Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Consider completing a new Form W-4 each year and when your personal or financial situation changes. PDF of W-4 http://www.irs.gov/pub/irs-pdf/fw4.pdf

 Your employer uses this information to withhold the correct federal income tax from your pay. Withholding allowances vary from person to person based on a number of circumstances If you are claimed as a dependent on someone else’s tax return, you should claim zero allowance

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

Net Income vs. Gross Income Gross income is the total amount a worker is paid before any required or voluntary deductions are made. Net income, also called “take home pay,” is the amount a person receives when he cashes or deposits his check. It is the remaining amount after deductions are made.

Gross Income - Deductions Net Income

Do You Know… What form do you get from your employer at the end of the tax year if you had federal tax withheld from your paycheck?

Sample W-2 Form 16,680.24 1,728.00 16,680.24 1034.16 Real World Business Chicago, IL 60640 16,680.24 241.92 D 2000.00 Irma Money 2301 South Jackson Chicago, IL 60640 Summary of tax deductions from pay stub. Notice that salary was $20,000, but taxable income (box 1) is much less because of pre-tax deductions! One for each job in year. Must be mailed to employees by January 31. Used to file tax return that must be filed by April 15.

What is W-2 Form? Your employer issues you a W-2 if you had federal tax withheld from your paycheck. W-2 reports the total amount of tax withheld. You will receive one W-2 form for each job you worked at during the year. Summary of tax deductions from pay stub. Notice that salary was $20,000, but taxable income (box 1) is much less because of pre-tax deductions! One for each job in year. Must be mailed to employees by January 31. Used to file tax return that must be filed by April 15.

1040EZ Form The 1040 EZ form offers quick and easy tax filing to some Americans.

Where do you get the 1040EZ form? Local Library. U.S. Post Offices Online

Who should use the 1040 EZ? Your filing status is single or married filing jointly. You do not claim any dependents. You do not claim any adjustments to income . You had only wages, salaries, tips, taxable scholarship or fellowship grants. your taxable interest was not over $1,500. Your taxable income is less than $100,000.

1040EZ is Simple to File The one-page form has four short sections: Personal Information Sources of Income Payments, credits and tax Calculating refunds and amounts due Personal Information: name, address and Social Security number Sources of Income: wages, salaries, tips, taxable interest of $1,500 or less Payments, credits and tax: tax payments if you have already made through employer withholding or making estimated tax payments. Calculating refunds and amounts due: If you have overpaid, you are entitled to a refund. If you have underpaid, you need to include a payment for the remaining balance with your tax return.

Do not need to file a tax return if you earn below this amount If your gross income is below the number on the right, you are not required to file a tax return. If it is more than that number, you do need to. Find your filing status and age bracket. Do not need to file a tax return if you earn below this amount Filing Thresholds for 2015 Filing Status Age Gross Income Single Under age 65 $10,300

If someone is claiming you as a dependent, the IRS requires that you file a tax return of your own. You earned more than $6,300.  You have more than $1,050 of unearned income. Unearned income is money that you get without working like interest and dividends. Your earned and unearned income is more than the greater of (1) $1,050 or (2) earned income plus $350  You had tax taken out of your paychecks and you want it back.

Samples and Practice Next we will take a look at how to complete the form. Then you will get to fill out one on your own.

Using the following, let’s practice A blank 1040EZ form. Sample W-2 Sample completed 1040EZ

Now it is your turn to try! Print the name, address and Social Security Number. Using the sample W-2 form, complete the Income section and calculate the taxable income. Complete the payments and tax section and then go to the booklet (sheet) provided in the handouts to calculate the tax.

1040 EZ PDF of 1040 EZ form http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

W4

The IRS has provided wonderful resources for students to learn about taxes. Basic modules are available at http://www.irs.gov/app/understandingTaxes/student/tax_tutorials.jsp and lessons at http://www.irs.gov/app/understandingTaxes/student/whys.jsp

Continued Find out whether you will get a refund (Line 11a) or you owe money to IRS (Line 12). If you are getting a refund, you can have your refund mailed to you or directly deposited into your bank account. If you owe money, you have to write a check. Be sure to sign your return and add in additional information as required. Good Luck!!

When is the filing deadline for taxes? Usually April 15 of the following year.

Resources 1040EZ Forms 1040EZ Instructions Video Instructions on Filing 1040EZ Sample W2 Form More forms from the IRS