File a Tax Return 5.2

W2

- Comes from employer. - Summary of your earnings and withholdings for the year. - You should have one for every job you held throughout the year (your employer also sends a copy to the IRS). - The gov't requires a copy of your W2 when you file your taxes as well. - Not reporting your earnings will earn you a visit from the IRS.

Types of tax forms

- There are 3 types of forms most often used when filing taxes, all of which are available online, or at a post office or library. - The 1040 and 1040A forms allow you to itemize deductions to reduce the amount you owe. - This is helpful if you: - own a house - have children - invest in the stock market - run a business

1040EZ

- To use the 1040 EZ you must: - be single or married and filing together - under the age of 65 - not blind - have income of less than $100,000 - earned less than $1,500 in interest - have no income other than wages, interest, tips, scholarships, or unemployment compensation

sources of income 1099-INT

- you get a 1099-INT for any interest you earned on money in the bank - The bank sends a copy to the IRS and you

Tax return

a set of forms that taxpayers use to calculate their tax obligation

Form 1099-INT

a statement of the interest your bank paid on your savings that year

Form W4

a summary of your earnings and withholdings for the year

Social security number

a unique number assigned to you by the federal government

deductions

expenses you can legally subtract from your income when calculating your taxes

dependents

people you support financially, such as children

Completing 1040EZ

step 1: Identify Self - name - address - SSN step 2: Identify Income: - total wages/salaries/tips - taxable interest income - unemployment compensation - these gives you adjusted gross income step 3: Deductions - you may only claim yourself if no one else can claim you (guardian/parent) - if you can't claim yourself. complete wksht on back of form, there may still be a limited amount you can deduct, even if someone else is claiming you - if no one can claim you, you qualify for a standard deduction step 4: Taxable income: - when you subtract line 5 from line 4 you get line 6 - figure used to determine taxes step 5: Payments and Tax - let's start with the federal income tax withheld -on line 7 you will enter the amount of tax that was already withheld by your employer - Don't forget, if you had more than one job, you must add the amounts withheld from ALL W2s to calculate an accurate total - next comes earned income credit - if you had a really low income, you may be eligible for another tax credit (which is treated as if were a tax payment) - On line 8 you add what was already withheld from your pay along with any income credits. This tells you the taxes you have already paid. step 6: Tax - Each form contains a table with the amount of tax you owe for the year - Remember, your taxable income is listed on line 6. You must find where your taxable income falls in that table, looking at the number that pertains to you (single or married filing jointly) REFUND OR PAY UNCLE SAM Refund: - since taxes are withheld from your paycheck throughout the year, most of your taxes have probably been paid. - If more was withheld than necessary, you get that money back - write the amount on line 11a Pay Uncle Sam: - if you owe more than has already been withheld, you will need to pay the rest of what is owed - write the amount on line 12

Your Responsibility

the accuracy of your return, no matter how you file your taxes

taxable income

the income figure that is used to determine your taxes

filing a tax return

the only way to have funds returned to you if either you owe no tax, or too much was withheld from your income

withheld

wasn't enough to cover your taxes, in which case you must send the remaining amount to the government