1. Personal Finance
Income Taxes
Presented By
Mrs. Bowden

2. Warm Up:
Read pp and
Discuss the picture and the caption on p. 141
List some standard deductions (non taxable income) in your notes

3. Today we will:
Define exemptions, dependents, taxable, nontaxable income, and deductions.

4. Filing Status:
Describes your tax filing group, which is based on your marital status
Single
Married filing a joint return
Married filing a separate return
Head of Household
Qualified widow(er).

5. Exemptions:
Amount you subtract from your income for each person who depends on your income to live
Each exemption reduces your taxable income and so you pay less in taxes
You are automatically allowed one unless someone else like a parent is claiming you.

6. Taxable Income:
Equivalent to your gross income minus all deductions and exemptions
Includes earned income and unearned income
Non taxable income includes – child support, gifts, inheritances, life insurance benefits, veteran’s benefits

7. Deductions:
Standard Deduction – a stated amount that you may subtract from your gross income – it changes each year and is determined by IRS
Itemized deductions – a list of deductions that pertain to your specific income and situation
Common expenses you can deduct to reduce your tax obligation are: medical and dental, state and local income taxes, property taxes, mortgage interest, charity, losses from theft moving expenses, environmental upgrades to your home

8. W-4 form: lists your exemptions

9. I-9 form: gives you the legal right to work – Employee Eligibility
Considers your social security number and other forms of identification
Proves that you are a legal US Citizen and have the right to work

10. W-2: Annual summary of all wages and deductions from your pay throughout the year
First step to preparing taxes – must be given to you by Jan 31.

11. W-2: Annual summary of all wages and deductions from your pay throughout the year
First step to preparing taxes – must be given to you by Jan 31.

12. Explain the difference between a W-4 form and a W – 2 form with a neighbor and discuss the types of things that are found on each one.
Discuss what an I9 is used for and what tax form 1040ez is used for.
Then we will discuss as a class.
See p and 147