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Taxes

Taxes. 1040. Single Individuals Must File Tax Returns If:. Individuals Must File Tax Returns By:. Your Total Income is $10,000 (this amount changes) or more Earned Income Unearned Income OR Self-Employed & your Total Profit is More Than $400.

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Taxes

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  1. Taxes 1040

  2. Single Individuals Must File Tax Returns If: Individuals Must File Tax Returns By: • Your Total Income is $10,000 (this amount changes) or more • Earned Income • Unearned Income OR • Self-Employed & your Total Profit is More Than $400 • April 15th unless that date falls on a weekend or holiday Individuals Must File Federal Tax Returns Using: • 1040 EZ OR 1040 A OR 1040

  3. Earned Income is Taxable & Includes: Earned Income is Generally Shown on a Form W-2 Or 1099 • Wages or salaries • Commissions • Tips • Fringe benefits and stock options • Paid Sick, Holiday & Vacation Days • Bonuses • Health & Life Insurance • Retirement Contributions • Workman’s Compensation

  4. Unearned Income is Taxable & Includes: • Interest from a Savings Account • Interest from Bonds • Dividends from Stock • Gains from Selling Investments • Income from Rental Property • Money from Retirement Fund • Gifts & Inheritance • Royalties • In-Kind & In-Cash Transfers • Prizes Unearned Income is Generally Shown on a Form 1099

  5. Income Adjustments • Moving Expenses if Related to Your Present Job or Starting a New Job • Retirement Account Investments • Tuition and Fees • Student Loan Interest Money Spent/Invested That Lowers a Tax Payers Total Income Examples:

  6. Adjusted Gross Income (AGI) • Total Income – Income Adjustments

  7. Exemptions—Qualifying Child For Tax Purposes? • Who’s a Dependent? • Someone Who Lives with You More Than ½ the Year & • Under 19, or 24 if student & • Did Not Provide Over Half his/her own Support & • Is Not Filing a Joint Return unless only for a refund

  8. Exemptions Worth $3,900 (this amount changes) For Each: • Tax Payer • Dependent • Over 65 • Blind NOTE: • Exemptions Lower AGI (Adjusted Gross Income)

  9. Income is Lowered Also By: • Standard Deduction (amounts change) • $6,100 for Single • $12,200 for Married Filing Jointly OR • Itemized Deductions—Schedule A NOTE: • Use whichever is Larger

  10. Itemized Deductions-Schedule A-Examples • Medical & Dental Expenses (Limited) • Real Estate Taxes Paid • Vehicle Taxes from Registration • Donations of Money or Goods • Safe Deposit Box Fees • Union Dues • Losses Due to Theft, Vandalism, Fire, Storm (Limited) • Cost of Special Tools, Uniforms, or Protective Clothing (Limited) • Business Use of Home (Home Office) (Limited)

  11. Tax Credit • Lower Tax Amount • If Tax Amount is Zero, Can Give a Refund More Valuable Than Deductions You owe $1,003 in tax. You are eligible for either a $1,000 tax deduction or a $1,000 tax credit. Which would you choose? Tax Credit

  12. Tax Credits are More Valuable Than Deductions-How? $1000 Deduction—If your Original Income was $9,480, your tax is $1,003 When you deduct the $1000, $9,480 - $1,000=$8,480 is your new income Your new tax is $853 so you saved $150 $1003-$853=$150

  13. Tax Credits are More Valuable Than Deductions-How? $1,000 Credit—These are taken AFTER you calculate your tax Your tax on $9,480 is $1003 When you take a $1,000 credit Your new tax is $3 $1,003 - $1,000=$3 Which is a savings of $1,000

  14. Tax Credit Examples • Child Care Expenses • American Opportunity Credit for College • Children Under 18 Who Live With You • Home Energy Savings • First-Time Homebuyer • Lower Income Families

  15. Federal Taxes Used For: • National Defense (Wars) • Social Security • Medicare/Medicaid • Interest on the National Debt • President , Senators and House Representatives • All White House Workers • Agriculture • Foreign Affairs • Veteran Benefits • Environmental and Natural Resources

  16. State & Local Taxes Used For: • Education • Public Transportation • Fire Fighters & Police Officers • Road & Traffic Light Repair • Capitol & Government Building Maintenance • Congress, Governors, Mayors, State Representatives • All Government Workers • Garbage Collecting • Healthy Drinking Water

  17. One of Most Controversial Issues For Citizens • How Tax Money is Used Best Way to Voice Opinion • Vote

  18. Federal Income Tax History • Created in 1913 • 16th Amendment Gave Congress the Power to Tax

  19. Income Tax Fun Fact • In 1916, Congress changed the text of the income tax law, removing the word "lawful" from "lawful business" • Now ALL income, whether attained by legal means or not, was taxable. • Because of this, many criminals who were guilty of other infractions were sent to prison for tax evasion.

  20. Types of Taxes • Income • Payroll • Unemployment State & Federal • ½ of Medicare & Social Security • Sales • Real Estate • Personal Property

  21. Tax Preparation or Help • Certified Public Accountant (CPA) • H & R Block • IRS • Tax Programs If you have a professional complete taxes, make sure they sign off on the return. If they make a mistake, the will at least cover your penalty and interest.

  22. Why Do You Have a Social Security # • Social Security Administration keeps track of your earnings to determine benefits you will get when retire, become disabled, or die and survivors get. • IRS uses it to identify you

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