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Tax Terms You Need To Know

Tax Terms You Need To Know. W-2. A form reporting one’s compensation (taxable wages) for the year. Filled out by the employer. W-4. Form an employee completes stating the number of deductions he/she has Example: Children. 1040 EZ. Simplest form used to file your taxes

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Tax Terms You Need To Know

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  1. Tax Terms You Need To Know

  2. W-2 • A form reporting one’s compensation (taxable wages) for the year. • Filled out by the employer

  3. W-4 • Form an employee completes stating the number of deductions he/she has • Example: Children

  4. 1040 EZ • Simplest form used to file your taxes • Taxable income must be below $100,000 • Must be single or married filing jointly • No dependents • Interest income less than $1,500

  5. Interest Income • income earned through depositing money in savings programs, buying certificates of deposit (CDs) or bonds, or lending your money

  6. 1099-INT • Statement you receive from payers of interest income (i.e. banks) that summarizes your interest income for the year

  7. 1040 • Form used if taxable income is more than $100,000 • Used if you are reporting self-employment income • You are claiming income from sale of property

  8. 1040 A • Form used for income taxes • Used if you have capital gain distribution (selling item that was purchased for less than what you are selling it for Ex: property) • Used if claiming tax credits

  9. Earned Income Credit • Tax credit for certain people that work and have low wages • Must be single or married filing jointly • Must be 25—65 • Requirements: • $43,352 ($48,362 married filing jointly) with three or more qualifying children • $40,363 ($45,373 married filing jointly) with two qualifying children • $35,535 ($40,545 married filing jointly) with one qualifying child • $13,460 ($18,470 married filing jointly) with no qualifying children

  10. Hope Scholarship Tax Credit • a federal income tax credit based on the first $4,000 in postsecondary education expenses paid by the taxpayer during the tax year. • provides a tax credit of up to $2,500 per student per year for qualified higher education expenses during the first four years of post-secondary education

  11. Making Work Pay Credit • Temporary tax credit • Worth $400 • Must not be claimed by someone as a dependent to be eligible.

  12. Joint Return • Income tax filing status that can be used by a married couple in which the income and deductions for the two individuals are combined

  13. Deduction • An item or expense subtracted from adjusted gross income to reduce the amount of income subject to tax • Examples: Children, childcare expenses, student loan interest, business expenses

  14. Alaska Permanent Fund • The fund pays an annual dividend to all Alaska residents who meet eligibility requirements ($500-$2000) • The Alaska Permanent Fund originates from surplus revenues gained from the development of Alaska’s oil and gas reserves.

  15. Nontaxable Combat Pay • Members of the military only • Income you earn while performing military service in a designated combat zone is exempt from income tax

  16. April 15 • The day that your individual income tax return is due to the federal government. • If April 15 falls on a weekend, they are due the next business day.

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