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Chapter 7 Federal Income Tax “In the world nothing can be said to be certain but death and...
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Transcript of Chapter 7 Federal Income Tax “In the world nothing can be said to be certain but death and...
Chapter 7Federal Income Tax
“In the world nothing can be said to be certain but death and
taxes.” - Ben Franklin
Types of Taxes
The Govt. raises ________ by taxing U.S citizens and businesses.
______ _______ states that those with high incomes should pay more taxes (ability-to-pay principle).
3 types of taxes
Progressive Taxes Definition:
Example:
Regressive Taxes Definition:
Example:
Excise Taxes-
Proportional Taxes Definition:
Example:
Note:
Uses for tax revenues Local Level
Education Parks and
playgrounds Roads Police Dept. Fire Dept. Health Dept.
National Level Salaries for
Congress National defense Highways Wildlife refuges Welfare Foreign aid
IRS I______ R______ S______ Agency of Dept. of the _________ Main Functions:
The Power to Tax Power to levy taxes rests with ____________
Bills for raising revenue begin in the ________ ___ _________________
The ___________________________studies proposals and makes recommendations to the full House.
Bills must pass a vote in both the House and Senate and then be signed by the _______ before becoming law.
Paying Your Fair Share Tax brackets =
Voluntary compliance –
Taxes are due by _______ Tax evasion -
An IRS Audit Audit –
Taxpayers can represent themselves or have a representative like a lawyer, accountant, or agent
Audits involve confirming __________ ____________.
Filing Status your tax booklet has complete
descriptions of each status and how to qualify.
Exemptions Exemptions -
You are automatically allowed one exemption for yourself.
Exemption amount for 20___ is $_____
Gross Income Gross income -
Other Taxable Income Winnings from
Gambling Bartering
Income Pensions and
Annuities Rental Income Royalties
Estate and Trust Income
Income from the Sale of Property
Employer-reimbursed Tuition
Items NOT Taxable Items that are not taxable and not
part of gross income include:
Finding Final Taxable Income
Gross Income- Adjustments Adjusted Gross Income- Standard Deduction or Itemized
Deductions- Exemptions
Taxable Income
Tax Return Terms Adjustments –
Deductions -
Itemize –
Tax Return Terms Standard Deduction –
Exemptions –
Taxable Income -
Tax Credits –
Preparing to File Forms will be either _____, _____, or ____
If you did not earn enough to file but you had taxes withheld, you need to file to get a return.
You must file by April 15th of the year after you earned income.
Forms 1040EZ (Short Form) -
1040A (Short Form) -
1040 (Long Form) -
To Begin, You Will Need
Filing Electronically 1040EZ and 1040A forms can be filed at
www.irs.gov You can pay any taxes owed
electronically also at this site. If you are owed a refund, filing
electronically will enable a quicker processing of you refund check.
If you file electronically make sure you print a copy of the return.
1040EZ Example #1Georgina B. Bales (SS# 541-33-9892)485 West 11th Ave.Ogden, UT 87667
Georgina is a clerk at a local store. She earned $16,500 last year from her job, plus $200 interest on her savings account. She had $1,016 withheld in federal income tax last year. She is single and no one can claim her as a dependent.
Form 1040EZ
1040EZ Example #2Brian Smith (SS# 354-58-6102)1927 Peach LaneSummerville, CO 97153
Brian is 16 and had a part-time job after school. He is single and his parents claim him as a dependent. Brian earned $2,675 last year from his job. He had no taxable interest. Brian had $257 withheld in taxes.
Form 1040EZ
1040EZ Example #3Use your own information (do not include SS#)
You are single and your parents claim you as a dependent. Last year you made $6,542 at your part-time job and had $524 withheld for federal income tax. You earned $46 interest on your savings account.
Form 1040EZ