Taxes Using the IRS “1040EZ” Form "Taxes are the price we pay for civilization." What does this quote mean?

What do you already know? Based on what you know, how would you explain income taxes in the United States? What could be done to improve the taxation system in the United States? How would you justify taxation; someone that is getting paid more, as a result is getting taxed more (fair/unfair)?

Expectations-Taxes Unit It is expected that students will…establish the meaning of vocabulary terms, analyze key points, and understand the practical analysis of 1040EZs and W-4s as they are used in relating to filing taxes. It is expected that students will…Formulate a 1040EZ with 100% Accuracy. Essential Questions What is a W-4 form, explain the reasoning for higher allowances? What is the difference between earned income and unearned income? Give an example of each. For what reasons is the 1040 EZ the most used tax form for high school students?

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? V-1 V-2 W-1 W-2

Do You Know… Where can you most likely NOT get the 1040EZ form? Local Library Post Office School Library Online

Do You Know… This is price that most tax preparers will charge for a 1040 Tax Form with itemized deductions (Schedule A) plus a state tax return. $260 $100 $200 $75 260!

Taxes – A sum of money demanded by a government to support the government itself as well as specific facilities or services

United States Community State County City/Town Common Interests and concern for the common good. What are some benefits of being part of a community?

Military for national security Community Military for national security Roads Public Schools Police and Fire departments Libraries Recreation (Parks and Trails) What are some ways we would pay for the different luxuries we are afforded if we did not have taxes? What do you think the USA would look like without taxes?

Take home pay How much money is a good decent living? How much do you plan on making when you first get out of college?

How we pay taxes… Income Tax Payroll Property Sales Excise Excise tax, on gasoline its included in price.

Debt now equals $17.075 trillion

Where does revenue come from? Higher income = more tax paid. Payroll taxes (set Percentage) Based on earnings, paid to government by your employer. Supports Social Security and Medicare (FICA). Income Taxes You pay on income you receive, Varies on financial and family situation Earned Income – money from working Unearned Income – other sources other than employment You are responsible for calculating Unearned Income: Interest, investments, Social security, Unemployment benefits, Alimony

SS and FICA Social Security FICA 24% Social Security Income for Retirees People with profound disability Children who lost a parent Death of Spouse FICA Helps pay for health care 24% Social Security 15% Medicare 15% Defense 13% Health 13% Income Security 6% Net Interest 5% Veterans Benefits 6% Other 3% Education

So you got the job! W-4 Allowance Tells the employer the correct amount of tax to withhold from an employee's paycheck based on the employee's marital status, number of exemptions and dependents and other factors Allowance Number that reduces the amount of money withheld from your pay The larger the allowances the less amount withheld 0,1

Allowances Claiming Zero Allowances The maximum amount of taxes is withheld. Meaning, when it comes time to file your tax return you will most likely receive a refund. If you are claimed as a dependent on someone else’s tax return, you should claim zero allowances. Claiming One Allowance (best option if you are single with one job)  If you are single and have one job, by claiming one allowance will most likely result in a refund when you file your taxes. Claiming two Allowances If you’re married, you can claim two allowances – one for you and one for your spouse.

Withholding Withholding too much Withholding too little Payroll calculated on ANTICIPATED annual salary Results in refund Withholding too little Funds due to government when taxes are filed Payments can be made Reduce allowances (0, 1, 2) Specify extra $$ withheld on W-4 (Claiming zero allowances means less take home pay, but a bigger tax refund during tax season.)

Tax Documents W-2 Form 1099-INT Given to you by your employer by Jan 31. Form 1099-INT Interest from the bank. Counts as income Form 1040 – Used to file taxes if you have many itemized deductions Form 1040-EZ – Used to file taxes if You have no dependents (people you support financially) You and your spouse are under 65 Neither you nor your spouse is blind Your taxable income is less than $100,000 You earned no more than $1500 in interest You had no income other than wages, interest, tips, scholarships, or unemployment compensation

Dependents A dependent is a person other than the taxpayer or spouse who entitles the taxpayer to claim a dependency exemption. Each dependency exemption decreases income subject to tax by the exemption amount. The exemption amount for 2017 is $4050. A dependent may be either a "Qualifying Child" or a "Qualifying Relative."

Tax Table $57,311

Tax Table $57,311-$4050 = $53,261

Tax Return You are responsible for calculating A tax return is a form that individual taxpayers file with the federal, state or local governments to declare what they owe in taxes or to calculate the refund the government owes because the taxpayers paid too much during the year. You are responsible for calculating

Review Essential Questions Do I need to File? Justify the reasons for taxation. What is a W-4 form, why do people choose a higher allowance? What is the difference between earned income and unearned income? Give a real world example of each. Do I need to File?

When is the filing deadline for taxes? April 15 of the following year…But that’s a Sunday this year…so it’s on the 17th.

Expectations It is expected that students will: Formulate a 1040 EZ with 100% Accuracy. Every 1040 EZ submitted on Moodle (can be re done) Project Grade (40%) & It is part of your Final Exam A 1st Attempt 100% B 2nd Attempt 80% C 3rd Attempt 70% D 4th Attempt 60% New w-2 form for each attempt

Laura Lou

Billy Bob

IRS Scam

Jay-Z on Taxes Do you support this view? Is it fair/unfair?