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The 1040-EZ Form. Most people have an accountant do their taxes. But you don’t need an accountant if: You are single. Received a W-2 Form. Received a 1099-INT Form Made less than $1,500 from interest. You can do YOUR own taxes. For free! All you have to do is use Form 1040-EZ.
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Most people have an accountant do their taxes. • But you don’t need an accountant if: • You are single. • Received a W-2 Form. • Received a 1099-INT Form • Made less than $1,500 from interest.
You can do YOUR own taxes. For free! • All you have to do is use Form 1040-EZ. • Go to www.irs.gov and you can download it. You want to download the PDF file that has the form AND the instructions. • It’s also available at libraries.
What is the 1040-EZ form? • The 1040 Form is what you use to determine if you owe tax or get a refund. • You send the completed 1040 form to the government to tell them how much money they owe you….. • OR…. • You send the completed 1040 form with the money you owe the government. • The 1040 EZ is a really simplified version of the regular 1040 Form.
The 1040 Form has been around a LONG time… since 1913. • In 1913 Congress ratified the 16th Amendment, which gave Congress the authority to tax EVERYBODY’S income. • Here’s what the form looked like in 1913:
There is a saying that there are two things for certain in life: • Death and • Taxes • Nothing changes. The 1040 Form is still around today. Here is what it looks like:
There is a lot of stuff going on in the 1040-EZ form. • Don’t freak out. • It’s really easy to complete. Let’s go through it step by step.
In our example, we will be David Flores. • Stuff we need to know: • David is an employee at a music store in Chicago. • He just got his W-2 and 1099-INT in the mail. • He is single. Watch out ladies! David
(You will do this with Mister Crow) • First, get your W-2 form:
Fill out the name and address information: Do you want to donate to a Presidential Election Campaign?
Line 4: Add up Line 1 and 2. • This is your AGI – (Adjusted Gross Income)
Line 5: • Today, if you were to fill this out you would be a dependent since you are in high school. • However, this example uses David Flores. David is not a dependent. We will enter $8,950.
Line 5: • What is $8,950? Why are we entering this? • $8,950 is the “Standard Deduction.” The government is trying to help you out. • The Standard Deduction lessens the amount on which you get taxed. • For example, if you make $28,950 you will not get taxed on that entire amount. You get to deduct $8,950. $20,000 will be the amount you are taxed on.
Line 5: • Interestingly, if you make less than $8,950 you don’t have to pay ANY tax. • Should you still file a 1040-EZ? • Heck yeah! If the government withheld any money from your paycheck they have to give you a refund. • But they won’t give you a refund unless you file the 1040-EZ!
Line 6: Subtract Line 5 from Line 4. • $54,556 - $8,950 = ? • This is the amount on which you have to pay taxes. • This is your TAXABLE INCOME.
Line 7: Enter the amount the government withheld. (Box 2 from your W-2.)
Line 10: Enter the amount from Line 7. • This is the amount of TAX you have already paid.
Line 11: • There is a packet that usually comes with the 1040-EZ form. • On page 28 you can find a tax table that will lists the TAX you owe for your specific TAXABLE INCOME. • It looks like this:
Line 11: • David’s TAXABLE INCOME is on line 6. • What is his TAXABLE INCOME?
Line 11: • David’s TAXABLE INCOME is on line 6. • What is his TAXABLE INCOME? $45,606
Line 11: • We now need to find what the tax for $45,606 will be according to that tax table. • Keep in mind that David is single. • What is the TAX for $45,606?
Line 11: • Enter this amount on Line 11.
Line 12: • Is Line 10 bigger than Line 11? • If Yes, subtract Line 11 from Line 10. • In our example Line 10 is bigger. • $8435 - $7750 = ? • This is your refund!
Line 12: • If you are getting a refund you can have your money deposited directly to your bank account. • You have to enter the routing number and account number.
Line 12: • If you are getting a refund you can have your money deposited directly to your bank account. • You have to enter the routing number and account number.
Line 13: • Is Line 11 bigger than Line 10? • If Yes, subtract Line 10 from Line 11. • Uh oh!! This is how much tax you owe! • Luckily, David is getting a refund in our example. We leave Line 13 blank.
Sign the Form: • Sign and date the appropriate parts of the rest of the form. • Congrats! You are done!
Now, once you get your refund you have make some tough choices: • Go on a Road Trip? • Invest the money? • Take Mister Crow out for dinner for helping you with your taxes?