Chapter 7 Federal Income Tax

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Presentation transcript:

Chapter 7 Federal Income Tax MYPF Chapter 07 11-Sept-2001 Chapter 7 Federal Income Tax Our Tax System Filing Tax Returns © South-Western Educational Publishing

Describe components of the U.S. tax system. Lesson 7.1 Our Tax System Discuss the purpose of taxes and different types of taxes in the United States. Describe components of the U.S. tax system. © South-Western Educational Publishing

Types of Taxes Progressive taxes Regressive taxes Proportional taxes © South-Western Educational Publishing

Components of the Tax System The IRS The power to tax Paying your fair share Tax brackets Tax evasion © South-Western Educational Publishing

IRS Audit Correspondence audit Field audit © South-Western Educational Publishing

Lesson 7.2 Filing Tax Returns Define tax vocabulary. Prepare tax Forms 1040EZ and 1040A. © South-Western Educational Publishing

Filing Status Single person Married person filing a joint return Married person filing a separate return “Head of household” Qualifying widow(er) with a dependent child © South-Western Educational Publishing

Exemptions Personal exemption Dependent exemption © South-Western Educational Publishing

Gross Income Wages, salaries, and tips Interest income Dividend income Unemployment compensation Social security benefits Child support Alimony © South-Western Educational Publishing

Adjusted Gross Income Gross income – Adjustments Adjusted gross income © South-Western Educational Publishing

Taxable Income Gross income – Adjustments Adjusted gross income – Deductions – Exemptions Taxable income © South-Western Educational Publishing

Deductions Itemize Standard deduction © South-Western Educational Publishing

Tax Credits For college tuition For childcare to enable parents to work For lower-income wage earners © South-Western Educational Publishing

Preparing to File Who must file? When to file? Which form to use? Where to begin? Filing electronically © South-Western Educational Publishing

Preparing Your Income Tax Return Tax preparation software Form 1040EZ Form 1040A © South-Western Educational Publishing

Form 1040EZ Step 1: Name, address, and social security number Step 2: Report income Step 3: Compute tax Step 4: Refund or amount owed Step 5: Sign the return © South-Western Educational Publishing

Form 1040A Step 1: Name and address Step 2: Filing status Step 3: Exemptions Step 4: Total income Step 5: Adjusted gross income © South-Western Educational Publishing

Form 1040A (continued) Step 6: Taxable income Step 7: Tax, credits, and payments Step 8: Refund or amount owed Step 9: Signature © South-Western Educational Publishing