Taxes 1040

Individuals Must File Tax Returns By: Single Individuals Must File Tax Returns If: Your Total Income is $10,300 (this amount changes & is the standard deduction {6,300} + 1 exemption {4,000}) or more ($6,300 earned income if you are a dependent) Earned Income Unearned Income Individuals Must File Tax Returns By: April 15th unless that date falls on a weekend or holiday Individuals Must File Federal Tax Returns Using: 1040 EZ OR 1040 A OR 1040

Earned Income is Taxable & Includes: Earned Income is Generally Shown on a Form W-2 Or 1099-MISC Wages or salaries Commissions Tips Fringe benefits and stock options Paid Sick, Holiday & Vacation Days Bonuses Health & Life Insurance Retirement Contributions Workman’s Compensation

Unearned Income is Taxable & Includes: Interest from a Savings Account Interest from Bonds Dividends from Stock Gains from Selling Investments Income from Rental Property Gifts & Inheritance Prizes Money from Retirement Fund Royalties In-Kind & In-Cash Transfers 1099-INT; 1099-DIV Nothing Other 1099 Forms

Money Spent/Invested That Lowers a Tax Payers Total Income Income Adjustments Money Spent/Invested That Lowers a Tax Payers Total Income Examples: Moving Expenses if Related to Your Present Job or Starting a New Job Retirement Account Investments Tuition and Fees Student Loan Interest

Adjusted Gross Income (AGI) Total Income – Income Adjustments

Exemptions—Qualifying Child 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 For Tax Purposes?

Exemptions Worth $4,000 for 2015 (this amount changes) For Each: Tax Payer Dependent Over 65 Blind NOTE: Exemptions Lower AGI (Adjusted Gross Income)

Income is Lowered Also By: Standard Deduction (amounts change) $6,300 for Single $12,400 for Married Filing Jointly OR Itemized Deductions—Schedule A NOTE: Use whichever is Larger

Itemized Deductions-Schedule A-Examples Medical & Dental Expenses (Limited) Real Estate Taxes Paid Vehicle Taxes from Registration Donations of Money or Goods Safe Deposit Box Fees Union Dues Losses Due to Theft, Vandalism, Fire, Storm (Limited) Cost of Special Tools, Uniforms, or Protective Clothing (Limited) Business Use of Home (Home Office) (Limited)

More Valuable Than Deductions Tax Credit Lower Tax Amount If Tax Amount is Zero, Can Give a Refund More Valuable Than Deductions You 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=$3 Which is a savings of $1,000

Tax Credit Examples Child Care Expenses American Opportunity Credit for College Children Under 18 Who Live With You Home Energy Savings First-Time Homebuyer Lower Income Families

Federal Taxes Used For: National Defense (Wars) Social Security Medicare/Medicaid Interest on the National Debt President , Senators and House Representatives All White House Workers Agriculture Foreign Affairs Veteran Benefits Environmental and Natural Resources

State & Local Taxes Used For: Education Public Transportation Fire Fighters & Police Officers Road & Traffic Light Repair Capitol & Government Building Maintenance Congress, Governors, Mayors, State Representatives All Government Workers Garbage Collecting Healthy Drinking Water

One of Most Controversial Issues For Citizens How Tax Money is Used Best Way to Voice Opinion Vote

Federal Income Tax History Created in 1913 16th Amendment Gave Congress the Power to Tax

Income Tax Fun Fact 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.

Types of Taxes Income Payroll Sales Real Estate Personal Property Unemployment State & Federal ½ of Medicare & Social Security Sales Real Estate Personal Property

Tax Preparation or Help Certified Public Accountant (CPA) H & R Block IRS Tax 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.

Why Do You Have a Social Security # 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