Principles of Business, Marketing and Finance Income Tax Return Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms Income Taxes - tax levied by a government directly on income, especially an annual tax on personal income. Filing Status - your tax-filing group based on your marital status Exemption - an amount you may subtract from your income for each person who depends on your income to live Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms Gross Income - all taxable income you receive, including wages, salaries and tips Adjusted Gross Income - gross income less adjustments Itemized Deductions - expense listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms Standard Deduction - a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income - the amount on which you will pay income tax Tax Credit - an amount subtracted directly from the tax owed Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms IRS 1040EZ Tax Form - A 1040EZ form is an alternative to the Internal Revenue Service's (IRS) 1040 income tax form and offers a faster and easier way to file taxes, meant for taxpayers with rudimentary tax situations. Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms W2- Are records of wage and salary earnings and taxes withheld Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms 1099- Are records of untaxed earnings taxes are not withheld and must be paid when filing with the IRS Are most often used by independent contractors and freelancers as well as anyone with income from untaxed sources Include many types based on the source of the income Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Need to Know Terms W4- Are filled out by new employees and indicate how much money should be withheld from an employee’s paycheck the more “allowances” claimed, the less an employer will withhold for taxes withholding in addition to allowances may be requested Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Why Taxes? Are a necessary economic function and requirement of society Occur at local, state and national levels Can occur as the following: a point-of-sale charge a paycheck or salary deduction an added fee an increased cost of a good or service Of all types and levels are economically significant Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Why Taxes? Are important to economics because they provide governments income to pay for services provided to citizens and residents local taxes pay for services such as libraries, parks, garbage collection and fire protection state taxes pay for services such as highway building and maintenance and health services national taxes pay for services such as national defense, environmental protection and disaster relief Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Why Taxes? Provides revenue for public goods and services which benefit the community and country Relieves citizens of individual financial burdens and distributes economic burdens collectively Provides for the operation of government and public improvement Helps to offset the cost of living in a capitalistic society Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Federal Taxes Are taxes collected by the national government Provide the following benefits: national defense and security education welfare and social programs transportation and housing Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

State Taxes Are taxes collected by states Provide the following benefits: public utilities regulation of property state education state correctional facilities, such as jails and prisons protective services for the abused and neglected business and industry growth through training, services and payments Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Local Taxes Are taxes collected by counties, cities and districts Provide the following benefits: police, fire and library services health regulations education public transportation housing Discuss each term with students and consider a vocabulary quiz for better understanding: Filing Status – your tax-filing group based on your marital status Exemption – an amount you may subtract from your income for each person who depends on your income to live Gross Income – all taxable income you receive, including wages, salaries and tips Adjusted Gross Income – gross income less adjustments Itemized Deductions – expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income Standard Deduction – a stated amount you can subtract from adjusted gross income if you do not itemize deduction Taxable Income – the amount on which you will pay income tax Tax Credit – an amount subtracted directly from the tax owed Copyright © Texas Education Agency, 2012. All rights reserved.

Independent Practice Fill in your personal information on the Form 1040 EZ. Put a Zero (0) on lines 2, 3, 8a, 8b and 11. Put 10,300.00 on line 5. W2 & Tax Table located at www.phsbmf.weebly.com under Documents & Examples Use the financial information located on the W-2 & Tax Table to completecremaining required areas on the form (lines 1, 4, 6, 10 & 12) Calculate the tax return based on the formulas provided throughout the 1040 EZ. (line 13a) Sign and date in the SIGN HERE section and turn in completed Form 1040 EZ January 31 has arrived and it is time to begin completing the necessary paperwork to file a tax return. Using the W-2 provided, complete the following steps to file taxes by the federal April 15 deadline. Copyright © Texas Education Agency, 2012. All rights reserved.