1040

Taxes

April 15th unless that date falls on a weekend or holiday

Individuals Must File Tax Returns By:

Individuals Must FileFederal Tax Returns Using:

1040 EZ OR 1040 A OR 1040

Single Individuals Must File Tax Returns If:Your Total Income is $9,075 (this amount

changes) or more ($6,200 if you are a dependent)Earned IncomeUnearned IncomeOR

Self-Employed & your Total Profit is More Than $400

Wages or salaries CommissionsTipsFringe benefits and stock

optionsPaid Sick, Holiday & Vacation

DaysBonusesHealth & Life InsuranceRetirement ContributionsWorkman’s Compensation

Earned Income is Taxable & Includes:

Earned Income is Generally

Shown on a Form

W-2Or

1099-MISC

Interest from a Savings Account

Interest from BondsDividends from StockGains from Selling

InvestmentsIncome from Rental

PropertyGifts & InheritancePrizesMoney from Retirement

FundRoyaltiesIn-Kind & In-Cash

Transfers

Unearned Income is Taxable & Includes:

1099-INT; 1099-DIV

Nothing

Other 1099 Forms

Moving Expenses if Related to Your Present Job or Starting a New Job

Retirement Account InvestmentsTuition and FeesStudent Loan Interest

Income Adjustments

Money Spent/Invested That Lowers a Tax Payers Total Income

Examples:

Total Income – Income Adjustments

Adjusted Gross Income (AGI)

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

Exemptions—Qualifying ChildFor Tax Purposes?

Tax PayerDependentOver 65Blind

NOTE:Exemptions Lower AGI (Adjusted

Gross Income)

Exemptions Worth $3,950 for 2014 (this amount changes) For Each:

Income is Lowered Also By:Standard Deduction (amounts

change)$6,200 for Single $12,400 for Married Filing JointlyOR

Itemized Deductions—Schedule A

NOTE:Use whichever is Larger

Itemized Deductions-Schedule A-Examples

Medical & Dental Expenses (Limited)Real Estate Taxes PaidVehicle Taxes from RegistrationDonations of Money or GoodsSafe Deposit Box FeesUnion DuesLosses Due to Theft, Vandalism, Fire, Storm

(Limited)Cost of Special Tools, Uniforms, or Protective

Clothing (Limited)Business Use of Home (Home Office)

(Limited)

Tax CreditLower Tax AmountIf Tax Amount is Zero, Can Give a RefundMore Valuable Than

DeductionsYou 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

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

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=$3Which is a savings of $1,000

Tax Credit Examples

Child Care ExpensesAmerican Opportunity Credit for College

Children Under 18 Who Live With You

Home Energy SavingsFirst-Time HomebuyerLower Income Families

National Defense (Wars)Social Security Medicare/Medicaid Interest on the National DebtPresident , Senators and House

RepresentativesAll White House WorkersAgricultureForeign AffairsVeteran BenefitsEnvironmental and Natural Resources

Federal Taxes Used For:

EducationPublic TransportationFire Fighters & Police OfficersRoad & Traffic Light RepairCapitol & Government Building

MaintenanceCongress, Governors, Mayors, State

RepresentativesAll Government WorkersGarbage CollectingHealthy Drinking Water

State & Local Taxes Used For:

How Tax Money is Used

One of Most Controversial Issues For Citizens

Best Way to Voice Opinion

Vote

Created in 191316th Amendment Gave Congress the Power to Tax

Federal Income Tax History

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.

Income Tax Fun Fact

IncomePayroll

Unemployment State & Federal½ of Medicare & Social Security

SalesReal EstatePersonal Property

Types of Taxes

Tax Preparation or HelpCertified Public Accountant (CPA)H & R BlockIRSTax 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.

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

Why Do You Have a Social Security #