How to fill out a Tax Return

1. A tax return for a typical teenager (2007 return) How to fill out a Tax Return (about 44 slides)

2. Tax Return Forms • Form 1040 • all adjustment, deduction, and credit options included. • Form 1040A • Only the most popular adjustment, deduction, and credit options included • Form 1040EZ • No adjustments, only Standard Deduction, and only Earned Income Credit included • No dependents • e-File • www.irs.gov/efile

3. 1040 Form 1040EZ Form Gross Income- (Deductions + PE)Taxable Income Net Tax Gross Income- Adjustments (AGI) -Deductions -Personal ExemptionTaxable Income Gross Tax Liability -Tax CreditsNet Tax Tax Table

4. 1040EZPersonal Information 123 45 6789 Alex Mayer 7956 Cottonwood Lane Sacramento, CA 95828 

5. Income—Line 1

6. Gross Income • Wages and Tips are taxable • Unemployment compensation is taxable • Babysitting money is taxable • Scholarship money used for tuition or books is not taxable; it is not income—it’s tax free. • Scholarship prize money, if you don’t use it for education, is taxable • Scholarship money used for room and board is taxable

7. Wages and Tips • Your employer keeps track of how much money you’ve earned for the whole year • They also keep track of how much money they withheld from your paycheck for the whole year. • This information is on your W-2 form • You receive your W-2 form from your employer by the end of January.

8. Fed Taxes Withheld Wages 8,250.00 572.00 Alex Mayer 7956 Cottonwood Lane Sacramento, CA 95828 8,250.00 98.50 State Taxes Withheld W-2 Form The Regents of UC La Jolla, CA 92023

9. Income—Line 1 8,250 00

10. Taxable Interest—Line 2 8,250 00

11. Taxable Interest • Interest you earn in a bank account is taxable income. • Your bank keeps track of how much interest you have earned for the whole year. • This information is on form 1099-INT • Your bank will send you a 1099-INT in January, AND send a copy to the IRS

12. Interest Income Alex Mayer 7956 Cottonwood Lane Sacramento, CA 95828 1099-INT Wells Fargo Bank San Francisco, CA 96061 5.74

13. Taxable Interest—Line 2 8,250 00 6 00

14. Unemployment Compensation—Line 3 8,250 00 6 00

15. Unemployment Compensation • If you are fired, you can collect Unemployment Compensation money as you look for another job. • You cannot collect any money if you quit your job. • The state of California keeps track of how much unemployment compensation you received. • This information is on form 1099-G

16. Unemployment compensation California Dept of Revenue Alex Mayer 7956 Cottonwood Lane Sacramento, CA 95828 1099-G 243.15

17. Unemployment Compensation—Line 3 8,250 00 6 00 243 00 If you were not fired, your Unemployment compensation (Line 3) will be blank. Will your Line 3 be blank? Yes, let’s hope so…

18. Just add lines 1, 2, and 3 Total Income—Line 4 8,250 00 6 00 243 00 8,499 00

19. Standard Deduction and Personal ExemptionLine 5 Dependents check Yes and fill out worksheet 8,250 00 6 00 243 00 8,499 00 

20. Dependent’s Worksheet(on back of 1040EZ) 8,250.00 8,550.00 8,550.00 5,350.00 5,350.00 --0-- 5,350.00

21. Standard Deduction and Personal ExemptionLine 5 8,250 00 6 00 243 00 8,499 00  5,350 00

22. Taxable Income—Line 6 Line 4 – Line 5 8,250 00 6 00 243 00 8,499 00 5,350 00 3,149 00

23. Tax you already paid—Line 7 8,250 00 6 00 243 00 8,499 00 5,350 00 3,149 00

24. Fed Taxes Withheld 8,250.00 572.00 Alex Mayer 7956 Cottonwood Lane Sacramento, CA 95828 8,250.00 98.50 W-2 Form The Regents of UC La Jolla, CA 92023

25. Tax you already paid—Line 7 8,250 00 6 00 243 00 8,499 00 5,350 00 3,149 00 572 00

26. 8,250 00 6 00 243 00 8,499 00 0 00 Credits and Tax—Lines 8 and 9 The EIC is for people 25 years or older, not a dependent, and earning very little money. 5,350 00 3,149 00 572 00

27. 8,250 00 Line 7 + Line 8 6 00 243 00 8,499 00 Credits and Tax—Lines 8 and 9 5,350 00 3,149 00 572 00 0 00 572 00

28. 8,250 00 6 00 243 00 8,499 00 Tax you owe—Line 10 5,350 00 3,149 00 572 00 0 00 572 00

29. 8,250 00 6 00 243 00 8,499 00 Tax you owe—Line 10 Tax Table 5,350 00 3,149 00 572 00 0 00 572 00

30. Single Tax Table Taxable Income $3,149.00 Tax = $313

31. Tax you owe—Line 10 8,250 00 6 00 243 00 8,499 00 5,350 00 3,149 00 572 00 0 00 572 00 313 00

32. Refund—Line 11a No Amount owed—Nothing on Line 12 572 00 313 00 259 00

33. Alex had $572.00 withheld throughout the year. He only owed $313.00 in taxes for the year. He receives a $259.00 refund at the end of the year. Refund—Line 11a 572 00 313 00 259 00 How much money did Alex pay in taxes? $313.00

34. This person had $213.00 withheld throughout the year. They owe $313.00 in taxes for the year. They must pay $100.00 by April 15th. Amount you owe—Line 12 213 00 313 00 100 00 How much money did they pay in taxes? $313.00

35. No Refund—Nothing on Line 11a Amount you owe—Line 12 263 00 363 00 100 00

36. Sign your tax return 572 00 313 00 259 00 Alex Mayer Sales Clerk 4-04-08 916 689-8600

37. Staple the Federal copy of your W-2 form to your tax return Put it in the mail by midnight, April 15 Keep a copy (and your 1099 forms) for your records

38. Review 6 Questions

39. 1. How do you know how much money you earned in wages last year? W-2 form (from your employer)

40. 2. Which form shows how much bank interest you earned? 1099-INT form (from your bank)

41. 3. Which tax return form contains all possible adjustments, deductions, and credits? 1040 form

42. 4. Which tax return form are teenagers likely to use? 1040EZ form

43. 5. Jim got a $56.00 refund last year. Al had to pay $150 on April 15th. Who paid more in taxes? Cannot tell. Income taxes are paid each payday throughout the year—not just at the end of the year.

44. 6. How do you get a “refund”? Employer withholds too much Federal Income tax throughout the year

45. ---end of presentation---