1. Principles of Business, Marketing and Finance
Income Tax Return
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2. 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, All rights reserved.

3. 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, All rights reserved.

4. 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, All rights reserved.

5. Need to Know Terms
IRS 1040EZ Tax Form - A 1040EZ form is an alternative to the Internal Revenue Service's (IRS) 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, All rights reserved.

6. 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, All rights reserved.

7. 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, All rights reserved.

8. 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, All rights reserved.

9. 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, All rights reserved.

10. 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, All rights reserved.

11. 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, All rights reserved.

12. 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, All rights reserved.

13. 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, All rights reserved.

14. 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, All rights reserved.

15. 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, on line 5.
W2 & Tax Table located at 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 EZ. (line 13a)
Sign and date in the SIGN HERE section and turn in completed Form 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, All rights reserved.