taxes – what you can’t avoid!
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DESCRIPTIONTAXES – What You Can’t Avoid!. Instructor Name Class Title. Two Things You Can’t Avoid: Death and Taxes!. Understanding Taxes and Tax Forms. The first form you will work with is Form W-4 Personal Allowance Worksheet - PowerPoint PPT Presentation
TAXES What You Cant Avoid!Instructor NameClass Title
Two Things You Cant Avoid:Death and Taxes!
Understanding Taxesand Tax FormsThe first form you will work with is Form W-4 Personal Allowance WorksheetIt is filled out each time you begin a new job and/or if your family status changesIf you marry or have children, you will need to fill out a new W-4This form tells your employer how much money to withhold from your paycheck to pay the government your taxesWithholding Taxes: the tax your employer takes out of your paycheck
Form W-4Line A: you are a dependent as long as you are living with someone and they provide most of the money for your carethey claim you as a dependentLine B:Line C: Enter 0 at all times unless you and your spouse do not earn much combined income or your spouse does not earn anything this makes that person a dependent
Form W-4Line D: Does your salary provide for anyone else living in your household?Line E: See head of household conditionsLine F: Child care that you are claimingLine G: If you have a low income and have to care for childrenLine H: Add up your numbersyou want this to be as close to 0 as possibleBe sure to completely fill out lower part of the W-4:Print nameSS#Full Address
Form W-4Single, Married, Married, but withhold at higher Single rate you are filing single so you will have more tax taken out of your paycheck#5 total number from above#6 Additional amount you want withheld to make sure you pay enough#7 Exempt saying you dont make enough for the government to withhold any money. DO NOT use this unless you are absolutely sure you qualify
Form W-4#7 Exempt you dont earn enough income for the government to withhold any money from your paycheck. DO NOT use this unless you are absolutely sure you qualify!You will have to pay a penalty of $500 if you earn more than you thought you wouldSign & DateIf you forget to sign, your tax filing is not valid!
During the Regular Year
You do not need to keep track of your taxes-- that is what your employer does!
You may want to double check your pay stub to make sure that your tax deductions are being calculated correctly
Form W-2 Wage and Tax Statement
This is sent to you by your employer completely filled out!
Sent by January 31
Make sure everything is correct and then use it to file your tax information for the IRS!
Form W-22: Federal Income Tax Withheld: How much federal income tax your employer took out of your paychecks4: Social Security Tax Withheld: how much social security tax your employer took out of your paychecks6: Medicare Tax Withheld: how much Medicare tax your employer took out of your paychecks
Form W-2Lines 15 20: information on state tax and local tax deducted from each paycheck
You will need a W-2 from each job that you have held this year, even if you dont work there anymore!
Form 1099-INT Interest IncomeThis is sent to you by your bank or financial institution.
It shows how much money you have made on interest on your investments
You must pay taxes on your interest!
Form 1099A copy is also sent to the IRS, so they know what the amounts are you cant lie!
The type of investment you have will determine whether you must pay taxes on the interest or dividends earned
Filing Your TaxesYou must file you taxes by April 15Penalties for filing late!You can file for time extension, if necessaryWays to file:Hire an Accountant: they do all the work and even send in the formsInquire about fees charged if accountant filesFill out the forms yourself and send inE-File: electronically file your taxes Save money by filing your taxes yourself!
Tax TermsVoluntary Compliance: every citizen voluntarily files a tax return by April 15thTax Evasion: not reporting income or paying your taxesAudit: IRS wants additional data or evidence about your returnCorrespondence Audit: done by mailField Audit or Office Audit: meet with IRS agent in personCan give someone else power-of-attorney to take your placeCan bring a tax expert for advise and support
Federal Income Tax(Single taxpayer for 2006 Taxes) Annual Earnings Tax + Tax Rate Over$0 7,550$0 tax + 10% over 0$7,550 30,650$755 +15% over $7,550$30,650 74,200$4,220 +25% over 30,650$74,200 154,800$15,107.50 +28% over 74,200$154,800 336,550$37,650.50 +33% over 154,800$336,550 or more$97,653.00 +35% over 336,550Source: http://www.smbiz.com/sbrl001.html#pis06
Federal Income TaxHow much would you owe in taxes if you earned ? ? ?
$10,00010,000 7,550 = $2,450.002,450 * .15 = $ 367.50755 + 367.50 = $1,122.50
What if the government used a steady rate of 15%?10,000 * .15 = $1,500
$80,00080,000 74,200 = $ 5,800.005,800 * .28 = $ 1,624.0015,107.50 + 1,624 = $16,731.50
What if the government used a steady rate of 28%?80,000 * .28 = $22,400
$150,000150,000 74,200 = $75,800.0075,800 * .28 = $21,224.0015,107.5 + 21,224 = $36,331.50
What if the government used a steady rate of 28%?150,000 * .28 = $42,000
Basic Tax FormsThe following are common forms used by citizens to file their Federal taxes:
Forms 1040, 1040A, 1040EZ
Schedule A,B, or CDownload current tax forms @http://www.unclefed.com/IRS-Forms/2001/HTML/p52710.html
Form 1040 U.S. Individual Income Tax Return
Use this form if you want to itemize deductions or if you are a business ownerUse the Schedules with this document
Form 1040AUse this form if you have children, child care expenses, dependents
Form 1040EZThis is the easiest form to use!Use the EZ if you have limited dependents/exemptions usually if it is just you or maybe a spouse
Tax Form SchedulesSchedule A:Allows you to show where you spent your money and to get tax breaks on certain expendituresSchedule B:Shows interest and dividends for tax exemptionsSchedule C:Used in businesses to show profit or lossIf you own a business, you will want to fill one of these out!
Other FormsThere are many other forms that you can use for other exemptions and deductions
If you start having to use all of these forms, it is may be time to get some help!
Know when it is too much for you to handle