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Taxes & Government

Taxes & Government. Financial Literacy. Filing a tax return When does it need to be done? How do I do it? The government’s money What are the sources of the government’s income? What does the government do with it all?. A tax return is a set of forms that taxpayers

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Taxes & Government

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  1. Taxes & Government Financial Literacy

  2. Filing a tax return • When does it need to be done? • How do I do it? • The government’s money • What are the sources of the government’s income? • What does the government do with it all?

  3. A tax return is a set of forms that taxpayers use to calculate their tax obligation. Tax Return forms should be mailed (postmarked or submitted) no later than April 15th each year. Keep a copy for your records! Tax Return

  4. Form W-2 • Shows what you were paid & what was paid on your behalf for the year • Comes from employer – mailed by January 31 • See sample on page 164 • Form 1099-INT • Shows how much banks paid you in interest • Comes from the institution Income

  5. Three basic income tax forms individual for filing: • 1040 – most complicated • 1040A • 1040EZ – easiest Can get from local libraries, post office, IRS website Income Tax Forms

  6. Can do if: • Single (or married and filing jointly) • NO dependents • You (and your spouse) are under 65 • You (and your spouse) are not blind • Taxable income is less than $50,000 • Interest income is less than $400 • No income other than wages, interest, tips, scholarships, or unemployment compensation Keep it EZ

  7. Look at the sample on page 167 • Name & Address • Social Security Number • 1 – Total from W-2 form(s) • 2 – Total from 1099-INT form(s) • 3 – Other income • 4 – Adjusted Gross Income • 5 – Dependents and Standard Deduction • The rest of the form Completing the Form

  8. Adjusted Gross Income – all of your income added together • Taxable Income – amount used to determine tax due • Dependent – people you support financially • Deductions & Exemptions – expenses you can legally subtract from income Tax Terms

  9. Complete the sample 1040EZ together – use the info from Math of Money on page 169 • Complete the sample 1040EZ on your own – use the sample W-2 and 1099 forms and the table on page 168 • Kelly is single and can claim herself as a dependent Completing the Form

  10. When a person is self-employed and makes more than $400 per year, he/she must file a form 1040. Needs to complete a Schedule C – Profit and Loss Form Also pays Social Security and Medicare (employer’s and employee’s portion) Should pay taxes quarterly Self Employed

  11. The Government

  12. Sources of Federal Government Income for 2006

  13. Income Taxes • Pay as you earn • Sales Taxes • Pay as you buy • Property Taxes • Pay annually • Excise Taxes • Taxes on certain items – tobacco, gasoline, alcohol, firearms • Estate & Gift Taxes • Only estates higher than a certain amount are taxed • The giver of a gift over $15,000 must pay a tax Types of Taxes

  14. “Sin” Taxes • Charitable Donations • Energy Efficient Devices Power to Influence

  15. Take a look at the chart on Page 180 – Federal Spending & Page 181 for what State and Local Governments Provide Government Spending

  16. Unemployment • Who pays? • Employer • Who receives? • Past employees who no longer have a job through no fault of their own Government Spending

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