What is Income Tax? What do I have to know about it?

What does an income tax form even look like?

What kind of information do I need to include? Personal Information Income Information Itemized Deductions Information on Household Employees Tax Payments Bank account information Foreign account information

Personal Information Includes education costs, adoption costs, childcare costs, and other costs. What kind of costs could you think of that might apply to you now or in the next few years?

Income Information Includes investment income from dividends, business or farming income, pension distributions, unemployment income, and other forms of income. How does this apply to you? What kind of income do you think you might have in the next few years?

Adjustments Adjustments are changes or situations that have financially occurred that might change some of your income. For example cancelled checks, moving expenses, student loan interest, etc. How might this apply to you now or in the next few years?

Itemized Deductions When you report your income tax there are a few items that you can take off your income tax. For example home mortgage interest, theft losses, job expenses (driving), charity contributions, etc. Can you think of some others? Do you give to any charities or do any of these apply to you?

Information on Household Employes Depending on the situation, people who live under one household who are earning money need to be represented.

Tax Payments If extensions were asked for or if an overpayment was made in the past.

Bank Information

Foreign Account Information

Your Chance Although you might be a ways off from doing an income tax statement, it is never to early to learn. So now you will be given a copy of a W-4 and as a class we will go through the different sections and pretend to fill it out.

Although you might not be earning money now and doing an income tax statement, you can learn a little more about what money is taking out of a pay check, so when you start earning money you are knowledgable. Read the article The Paycheck Breakdown: What You Earn Is Not What You Keep. As you read the article think about and answer the following three questions: What is the overall message of this article How does this article relate to the income tax presentation? How does this article relate to you?