1. Aim: 1040 & Schedule A Course: Math Literacy Do Now: Aim: Can I lessen my tax obligation beyond exemptions? What personal expenses shouldn’t be taxed? medical expenses state and local income taxes property tax casualty and theft losses alimony charity gambling losses mortgage interest moving expenses business expenses job seeking expenses tax prep fees

2. Aim: 1040 & Schedule A Course: Math Literacy Form 1040 and Schedule A Form 1040 used when deductions are taken. Schedule A – Itemized deductions: where deductions are listed Tax credits – amount that is subtracted from income tax after calculated from table. Deductions – amount subtracted from income before calculating on tax tables. Tax avoidance – using the rules to lower your taxes. Tax evasion – lying about items on return or not filing at all. Schedule B – lists dividend and interest incomes.

3. Aim: 1040 & Schedule A Course: Math Literacy 1040 with Sch A & B Margaret and Brian O’Sullivan are married. They have one child, Carole. Margaret works for a sports cable station and Brian is a cameraman. The O’s had combined wages of $76,521. They also had interest of $812 from Seaford Bank and $877 from Buffalo Bank. They received stock dividend of $444 from GM stock and $1,200 from Kodak stock. During the year, Margaret won $300 in the lottery. find the total income from wages, interest, dividends and prize.

4. Aim: 1040 & Schedule A Course: Math Literacy 1040 with Sch A & B Margaret and Brian O’Sullivan are married. They have one child, Carole. Margaret works for a sports cable station and Brian is a cameraman. The O’s had combined wages of $76,521. They also had interest of $812 from Seaford Bank and $877 from Buffalo Bank. They received stock dividend of $444 from GM stock and $1,200 from Kodak stock. During the year, Margaret won $300 in the lottery. find the total income from wages, interest, dividends and prize.

5. Aim: 1040 & Schedule A Course: Math Literacy The O’s Schedule B – Interest and Dividends Enter interest and dividend income

6. Aim: 1040 & Schedule A Course: Math Literacy The O’s Adjusted Gross Income Enter income portion of 1040

7. Aim: 1040 & Schedule A Course: Math Literacy O’s Deductible Expenses Margaret teaches a night course at the local college and had $133 in educator exprenses. the O’s also had $3,009 worth of moving expenses. These two expenses are deductions from income. Find their Adjusted Gross Income (AGI).

8. Aim: 1040 & Schedule A Course: Math Literacy The O’s Schedule A Deductions The O’s had $18,800 in medical expenses last year. Medical insurance covered 80% of these expenses, so they only had to pay 20% of the medical bills. The IRS allows medical and dental expenses deductions for the amount that exceeds 7.5% of AGI. How much can they claim as a medical deduction? 18,800 x 0.20 = 3,760 expense to O’s 77,012 x 0.075 = 5,775.90 3,760 – 5,775.90 = -2,015.90 O’s can’t take a med. deduction on Schedule A

9. Aim: 1040 & Schedule A Course: Math Literacy The O’s Other Schedule A Deductions The O’s paid $3,298 in state income taxes and $3,567 in real estate taxes. The paid $3,096 in mortgage interest.

10. Aim: 1040 & Schedule A Course: Math Literacy Schedule A - Charities The O’Sullivans gave $987 to different charities. The highest amount they gave to any single charity was $100. They also donated $450 worth of old clothes to different charities. The most they gave to any single charity was $120. Find the total of their charity contributions. Pete donated x dollars to charity over the last tax year. He also donated d bags of used clothing valued a c dollars each. Express his total charitable contributions algebraically.

11. Aim: 1040 & Schedule A Course: Math Literacy Schedule A – Casualty/Theft The O’s had $9,230 worth of flood damage that was not covered by insurance. Casualty requires a $100 deductible for each casualty: $9,230 - 100 = 9,130; then subtract 10% of AGI to find deductible amount: 9230 -.10(77,012) = 1429.00 (nearest dollar) Scott’s adjusted gross income was x dollars. He had three different casualties last year that were not covered by insurance. A car was stolen, and he did not have comprehensive insurance, so he lost c dollars. A storm caused s dollars damage, and his vintage violin, worth v dollars was destroyed in a fire. Express his casualty loss algebraically (c – 100 + s – 100 + v – 100) -.10x

12. Aim: 1040 & Schedule A Course: Math Literacy Schedule A – Miscellaneous Brian had $541 in expenses for job travel. Margaret and Brian belong to unions and pay $1,439 in dues. Brian took 2 college classes related to his employment - $2,315. Edgardo’s miscellaneous expenses were m dollars, and his adjusted gross income was a dollars. Express his Schedule A miscellaneous deduction algebraically. m –.02a

13. Aim: 1040 & Schedule A Course: Math Literacy 1040 – Total Itemized Deductions Find the O’Sullivans’ total itemized deductions from Schedule A.

14. Aim: 1040 & Schedule A Course: Math Literacy 1040 – Exemptions & Deductions Once Schedule A is completed, the O’s return to form 1040 to finish computing their taxes. Each exemption from the total number of exemptions line allows them a deduction on Form 1040. The amount can change. If the deduction for an exemption is $3,500, find the total amount the O’s can deduct. 3 exemptions: 3 x 3,500 = 10,500

15. Aim: 1040 & Schedule A Course: Math Literacy 1040 – the Final Bill The O’s both work and pay for child care. They can get a tax credit of $780. They install some energy-saving items in their home, and can receive a $133 tax credit for that.

16. Aim: 1040 & Schedule A Course: Math Literacy Model Problem Gloria is single. Her taxable income without deductions was $25,760. She was able to reduce her total income by $5,381 when she listed her allowable deductions on Schedule A. How much did she save in tax by using Schedule A? Schedule X – If your filing status is SINGLE If the amount on Form 1040 line 43 is: Enter on Form 1040 line 38 OVER -BUT NOT OVER - Of the amount OVER - $0$19,450...... 15%$0 19,45047,050$2,917.50 + 28%18,450 47,05097,62010,645.50 + 33%47,050 97,620... Use other worksheet (25,760 – 19,450).28 + 2,917.50 = 4,684.30 w/o ded. (25,760 – 5381 – 19,450).28 + 2,917.50 = 3,177.62 w/ ded. Gloria lessened her tax burden by $1,506.68