Building Your Financial House WELCOME !

Program Objectives Become more comfortable talking about money issues Identify the Framework for Building Your Financial House Walk away with facts and skills needed to build your financial house Gain confidence to make good money choices for your situation Be in a better position for long-term financial stability and success. Module 4: Check Taxes

Modules 1. Invest in Yourself 2. Maximize Earnings 3. Spend Sensibly 4. Check Taxes 5. Make Money Work 6. Protect Your Potential 7. Borrow to Grow Module 4: Check Taxes

Recap: Spend Sensibly Last time, we talked about: Money values & spending habits Live within your means by prioritizing needs and wants Developing and using a money map Using government-insured accounts to manage spending Module 3: Spend Sensibly

Did You Set A Goal? Module 3: Spend Sensibly (PAGE SS-3)

Did You Practice? Module 3: Spend Sensibly

Did You Learn More? Module 3: Spend Sensibly (PAGE SS-30)

Did You Make Progress? Module 3: Spend Sensibly

Module 4 Check Taxes Module 4: Check Taxes

Checking the insulation can minimize a house’s hidden heat loss, checking taxes can minimize dollars lost to overlooked deductions and credits. 4 Check Taxes Adrian Review where this module fits within the Framework for Building Your Financial House. -Next-

Self-Assessment Module 4: Check Taxes (PAGE CT-3)

Objectives Knowledge Actions Recognize the value in record keeping Identify the key components of a tax return Recognize the difference between total income and taxable income Recognize the difference between total tax and withholding Become aware of the various tax preparation methods and providers Establish a manageable record keeping system Identify credits and deductions overlooked or that may now qualify Weigh the pros and cons of tax refunds and make adjustments to withholding if necessary Select the appropriate tax preparer and avoid unnecessary fees Module 4: Check Taxes

How is Your Record Keeping? Module 4: Check Taxes (PAGE CT-5)

Record Keeping You are buying a new car and want to trade in your current car. Can you locate the title to the car? Module 4: Check Taxes

Record Keeping Your big screen TV that you bought last month isn’t working. Can you find the instruction booklet, warranty, and receipt? Module 4: Check Taxes

Last night there was a fire Record Keeping Last night there was a fire in your apartment. Do you have a list and pictures of household items to use when filing an insurance claim? Module 4: Check Taxes

Record Keeping What to keep: Vital Financial Legal Property Personal Module 4: Check Taxes (PAGE CT-8)

The Bucket List Module 4: Check Taxes

Record Keeping How long to keep: Add a discard date Module 4: Check Taxes

Record Keeping Why keep good records? Non-discriminatory Protection & proof Helps with money management Reduces stress Module 4: Check Taxes

Record Keeping Tools Module 4: Check Taxes (ADDITIONAL RESOURCES)

Taxes Module 4: Check Taxes

Everyone Subject to Taxation Who, What, When, and How Who Everyone Subject to Taxation Module 4: Check Taxes (PAGE CT-10)

Taxes Assessed on Income What Taxes Assessed on Income Module 4: Check Taxes

To Tax or Not to Tax? YES YES YES YES YES YES YES YES YES YES YES YES Module 4: Check Taxes (PAGE CT-11)

penalties for underpayment When Pay As You Go withheld from pay -or- estimated payments BE AWARE penalties for underpayment Module 4: Check Taxes (PAGE CT-10)

Sample Tier and Rate Schedule How – Progressive Tax Sample Tier and Rate Schedule Taxpayer 1 $50,000 Taxpayer 2 $100,000 Taxpayer 3 $125,000 $0 - $25,000 10% $25,001 - $50,000 15% $50,001 - $100,000 25% $100,001 - $150,000 28% $150,000+ 33% $50,000 x 15% = $7500 $100,000 x 25% = $25,000 $125,000 x 28% = $35,000 Module 4: Check Taxes (PAGE CT-12)

Progressive Tax Calculation $2,500 $3,750 $12,500 $25,000 x 28% = $7,000 $25,750 (21%) $2,500 $3,750 $50,000 x 25% = $12,500 $18,750 (19%) $25,000 x 10% = $2,500 $25,000 x 15% = $3,750 $6,250 (13%) 10% 15% 25% 28% Module 4: Check Taxes (PAGE CT-12)

Case Study (Pages 18-23) Module 4: Check Taxes

Exploring the 1040 Module 4: Check Taxes

Reviewing Key Components Module 4: Check Taxes

Filing Status and Exemptions Module 4: Check Taxes

Total Income Module 4: Check Taxes

Income Module 4: Check Taxes

Adjusted Gross Income (AGI) Module 4: Check Taxes

Adjustments Module 4: Check Taxes

Taxable Income Module 4: Check Taxes

Deductions (2015) the greater of… Itemized Standard $6,300 for Single or Married, filing separately $12,600 for Married, filing jointly or Qualifying Widow(er) $9,250 for Head of Household Itemized Medical Expenses (over 10% of AGI) Taxes Paid (state /local income, real estate, etc.) Interest Paid (mortgage, investment, etc.) Gifts to Charity Casualty and Theft Losses Job Expenses and Others (over 2% of AGI) Module 4: Check Taxes

Deductions Module 4: Check Taxes

Taxable Income Module 4: Check Taxes

Exemptions Module 4: Check Taxes

Taxable Income Module 4: Check Taxes

Total vs. Taxable Income Module 4: Check Taxes

Tax Module 4: Check Taxes

Taxes Module 4: Check Taxes

Tax Module 4: Check Taxes

Total Tax Module 4: Check Taxes

Credits Module 4: Check Taxes

Total Tax Module 4: Check Taxes

Payments Module 4: Check Taxes

Refundable Credits Module 4: Check Taxes

Net Result Module 4: Check Taxes

Refunds Module 4: Check Taxes

Total Tax vs. Withholding Module 4: Check Taxes

Adjust Withholding www.irs.gov Module 4: Check Taxes

Refund Recipe HOWEVER YOU WANT: things that are nice-to-have (treats, gifts, home upgrades, etc.) 3 1 NOW: must-have necessities (debt, past-due bills, immediate repairs, etc.) 2 FOR LATER: the unexpected and the future (emergencies, car repairs, long-term savings, etc.) Module 4: Check Taxes

Anna’s Refund Recipe ($6,166) 3 HOWEVER SHE WANTED (20%): How much? $1,200 For what? New TV: $ 800 Kids to spend: $ 400 1 NOW (45%): How much? $2,805 For what? Credit Card: $1,100 Medical bill: $ 400 Cable bill: $ 140 Internet bill: $ 100 Bank fees: $ 165 Glasses: $ 600 Clothes $ 300 2 FOR LATER (35%): How much? $2,160 For what? Rent reserve: $ 600 Back-to-School: $ 400 Holidays: $ 300 Car insurance $ 860 Module 4: Check Taxes

Tax Preparers Yourself: www.irs.gov/freefile Free for those making less than $62,000 through IRS sponsored software programs Online fillable forms for everyone Commercial, step-by-step software Inexpensive Module 4: Check Taxes (PAGE CT-20)

Free Tax Preparers Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE): www.irs.treasury.gov/freetaxprep Free for those making less than $54,000 or for people age 60 and older IRS trained volunteers Module 4: Check Taxes (PAGE CT-21)

Paid Tax Preparers Enrolled Agents: Certified Public Accountants: www.naea.org Federally licensed tax professional Can represent client before the IRS Cost varies with services provided Certified Public Accountants: www.picpa.org Licensed by the state board of accountancy Expensive/ varies with services provided Module 4: Check Taxes (PAGE CT-20)

Paid Tax Preparers Chains: Usually trained through company tax courses Convenient locations, targeting struggling consumers Expensive/refund anticipation “products” Module 4: Check Taxes (PAGE CT-20)

Check Taxes We’ve covered: The value in good record keeping Key components of a tax return Differences between total and taxable income; total tax and withholding Recipes for tax refunds Differences between tax preparers Module 4: Check Taxes

Take Action – Set a Goal Module 4: Check Taxes (PAGE CT-3)

Take Action – Worksheets Module 4: Check Taxes

Take Action – Learn More Module 4: Check Taxes (PAGE CT-23)

Measure – Track Your Progress Module 4: Check Taxes

Please complete the session evaluation form. (Page CT-25) Module 4: Check Taxes (PAGE CT-25)

Building Your Financial House Thank You!