Tax Returns

How to File Your Taxes

-Electronically According to the IRS, 89.1% of all individual filers file their taxes electronically. You can use tax software (TurboTax, TaxCut, etc.) to prepare and file your tax return electronically (for a fee). These same companies also have websites (and phone apps) to prepare and file your tax return online (fee). Most lower-income filers can have one of these companies prepare and file their tax returns for free through the IRS website. -Mail in Paper Copy of All Tax Documents Takes longer for IRS to process Con: this delays getting your refund if you are due one

Calculating Your Refund or Amount Owed

-If you paid more (withheld) in taxes than your tax liability, the IRS owes you a refund. Subtract your tax liability from the amount you already paid (tax payments - tax liability) -The IRS will pay you back the amount of excess taxes you paid (refund). -If your tax liability is more than you paid, you owe the government underpaid taxes. (tax liability - tax payments) -You will need to pay the IRS the amount of your underpaid taxes and interest if you filed for an extension)

State Income Tax Returns

-The process for filing state income tax returns is similar to the process for federal tax returns: Calculate total earnings (gross income) Calculate taxable income (after allowed deductions) Determine tax liability on taxable income Calculate total taxes paid. Calculate refund or underpaid taxes owed. -Your income and tax payment information is found on the same W-2s and 1099s used for your federal return.

Direct Deposit to your bank account Quickest way to receive refund is within

10 working days

Each institution that paid you dividends will provide you a

1099-DIV.

Each institution that paid you interest will provide you a

1099-INT.

Gross Income Example

A single adult earning $24.00/hour working 40 hours a week ($960 per week) for 50 weeks out of the year will have earned $48,000 in gross income over that year. Out of each paycheck, $95.97 would have been withheld for FITW, for a total of $4,798.50 in FITW for the year. This information will be provided to the employee on his/her W-2 from the employer no later than January 31 of the new calendar year.

tax deduction

An expense, such as a charitable contribution, that can be deducted from one's taxable income. Aka:something the IRS allows you to deduct off of your income

Tax Filing Deadline is

Deadline: April 15 (or April 16 or 17 if April 15 is on a weekend) for the previous calendar year's information.

Gross Income is Made Up of Your

Earned Income & Unearned Income

Calculating Your Gross Income

If you had more than one employer during the calendar year, you will receive a W-2 from each employer. Each institution that paid you interest will provide you a 1099-INT. Each institution that paid you dividends will provide you a 1099-DIV. Add up the income shown on all of your W-2s, 1099-INTs, and 1099-DIVs.

Unearned Income is

Income from any source other than employment Interest paid on an interest-earning investment (savings accounts, bonds). Dividends paid to shareholders who own a company's stock.

Earned Income is

Money earned from working a job for pay Salaries Hourly wages Commissions, bonuses, tips, etc

Your income and tax payment information is found on the same

W-2s and 1099s used for your federal return

Calculating Your Total Tax Withholdings

Your W-2s and 1099s will also have the amount each of those sources of income paid in FITW for you. -Income sources from which you receive 1099s generally do not make any FITW payments. You add up the amount of FITW paid by each source to determine your total tax withholdings.

When Federal Income Taxes Are Due

Your employer pays your taxes to the Internal Revenue Service (IRS) throughout year as your Federal Income Tax Withheld (FITW).After end of the calendar year, you must determine if you have paid enough, too little, or too much. Too little: must pay more Too much: you will get a refund

If you had more than one employer during the calendar year, you will receive

a W-2 from each employer.

underpaid taxes

a fine the IRS may charge taxpayers who don't pay enough tax through withholdings or estimated payments during the tax year

Your Gross Income equals

all of your W-2s, 1099-INTs, and 1099-DIVs.

Standard Deduction

an amount of money set by the IRS that is not taxed fixed amount set annually by the IRS $12,400 for tax year 2020

dividend

The portion of corporate profits paid out to stockholders. AKA:an amount of the profits that a company pays to people who own shares in the company

For Tax Liability, if you are using tax filing software or filing online, the software will

calculate your tax liability for you.

The fastest way for you to receive your refund is to Have the IRS direct

deposit your refund directly into your bank account

Mail in Paper Copy of All Tax Documents Cons: This delays getting your refund if you are.

due OWED 欠款 one

According to the IRS, 89.1% of all individual filers file their taxes

electronically

The fastest way for you to receive your refund is to: File your tax return

electronically

You will need to pay the IRS the amount of your underpaid taxes and interest if you filed for an

extension

File as early as possible from tax return if

getting refund

Your taxable income is your

gross Income (total of all income earned through work, investments, etc.) minus allowed tax deductions

Unearned Income interest paid on an

interest-earning investment (savings accounts, bonds)

Income sources from which you receive 1099s generally do not

make any FITW payments.

Paper Check Mailed to You Takes longer to receive refund could take how long?

months

Complete your tax return as early as possible to determine if getting refund or owe money If you owe money, this gives you

more time to come up with the money you owe

if you have paid enough, too little Federal Income Taxes ,

must pay more

Can only claim Standard Deduction and Itemized deductions at the same time?

no, one or the other

If your tax liability is more than you paid, you

owe the government underpaid taxes.

The IRS will pay you back the amount of excess taxes you

paid (refund).

Any tax you might owe must be paid

prior to the deadline, even if you applying for an extension; if you don't, you will pay a penalty for late payment of your taxes.

The process for filing state income tax returns is similar to the

process for federal tax returns

Dividends paid to

shareholders who own a company's stock.

Itemized deductions

sum total of all allowed tax deductions (charitable contributions, property taxes paid, state income taxes paid, mortgage interest paid, etc.). Note how homeowner's benefit from itemizing!

how to calculate the government underpaid taxes.

tax liability - tax payments

how to calculate IRS refund?

tax payments - tax liability

You can use tax software (TurboTax, TaxCut, etc.) to prepare and file your

tax return electronically (for a fee).

These same companies also have websites (and phone apps) to prepare and file your

tax return online (fee).

Mail in Paper Copy of All Tax Documents, takes longer for

IRS to process

Taxable Income equals

(gross income - standard deduction)

The process for filing state income tax returns

-Calculate total earnings (gross income) -Calculate taxable income (after allowed deductions) -Determine tax liability on taxable income -Calculate total taxes paid. -Calculate refund or underpaid taxes owed.

How You Can Receive Your Refund

-Direct Deposit to your bank account Quickest way to receive refund (within 10 working days) -Paper Check Mailed to You Takes longer to receive refund (could be months) The fastest way for you to receive your refund is to: File your tax return electronically Have the IRS direct deposit your refund directly into your bank account

You must file a tax return every year with the IRS showing:

How much you earned, How much of your income is taxable, How much you should have paid in income tax ,How much you paid in income tax, Whether you still owe more or should get a refund

Your W-2s and 1099s will also have the amount each of those sources of income paid in

FITW(federal income tax withholding) for you.

Unearned Income is reported on an IRS Form what number ?

Form 1099

Earned Income is reported on an IRS Form what number ?

Form W-2

Calculating Your Tax Liability

Fortunately, you don't need to calculate your tax liability yourself. If you are using tax filing software or filing online, the software will calculate your tax liability for you. If you are filing using the paper tax forms, the instructions have tax tables that you use to look up your tax liability.

Types of Tax Deductions

Standard Deduction - fixed amount set annually by the IRS $12,400 for tax year 2020 Itemized deductions - sum total of all allowed tax deductions (charitable contributions, property taxes paid, state income taxes paid, mortgage interest paid, etc.). Note how homeowner's benefit from itemizing! Can only claim one or the other, not both Should claim the larger amount of the two to lower your taxable income the most!

Tax Returns processes

Step 1:Calculating Your Gross Income Step 2:Calculate Your Taxable Income Step 3:Determine Your Tax Liability (how much you should have paid) Step 4:Calculate Your Total Tax Payments Step 5:Calculate Your Refund or Amount Owed

For Tax Liabilit, If you are filing using the paper tax forms, the instructions have

tax tables that you use to look up your tax liability.

Tax deductions reduce your

taxable income

Should claim the larger amount of Tax Deductions of the two to lower your

taxable income the most!

Most lower-income filers can have one of these companies prepare and file

their tax returns for free through the IRS website.

You must file a tax return every

year

If you paid more (withheld) in taxes than your tax liability, the IRS owes

you a refund.

If you cannot meet the deadline of tax return

you can file for an extension

After end of the calendar year, you must determine if

you have paid enough, too little, or too much

if you have paid enough Too much Federal Income Taxe

you will get a refund

Your employer pays your taxes to the Internal Revenue Service (IRS) throughout year as

your Federal Income Tax Withheld (FITW)

You add up the amount of FITW paid by each source to determine

your total tax withholdings.