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Lesson 14

Learn to calculate federal income taxes, estimate tax payments, determine refunds, and filing extensions. Understand withholding forms, payments, credits, and amendments. Properly assemble and submit your returns.

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Lesson 14

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Presentation Transcript

  1. Lesson 14 Finishing the Return

  2. Objectives • Calculate and report federal income taxes withheld from all sources • Calculate and report estimated tax payments • Calculate the refund or amount due • Determine if estimated taxes should be paid • Determine who qualifies for an extension of time to file • Determine if changes to the Form W-4 or W-4P should be suggested

  3. Checklist For Finishing The Return • Withholdings, Payments, and Other Credits • Paying Taxes or Adjusting Withholding • Advance Earned Income Tax Credit • Name, Address, and Taxpayer Identification Section

  4. Checklist For Finishing The Return - continued • Return Assembly and Copy • Site Identification Number • On Site Quality Review • Signing the Return - Self-Select Personal ID Number • Taxpayer Question • Where to Mail Paper Returns

  5. Federal Tax Withholding • Add all federal withheld income tax together • Withheld income tax can appear in: • Form W-2, box 2 • Form 1099-R, box 4 • Form 1099-INT, box 4 • Form 1099-DIV, box 4 • Form W-2G, box 2 • Form 1099-G, box 4 • Form 1099-MISC, box 4 • SSA 1099

  6. Estimated Tax Payments • Verify all federal estimated tax payments together • Be sure to include: • An overpayment from the 2005 return that was applied to 2006 tax payments • Payments made using the Form 1040ES, including the one made in January, 2007

  7. Refund or Balance Due • If the total payments exceed the total tax, this creates an overpayment • Overpayments are refunded unless applied to other accounts or tax years • If the total tax exceeds the total payments, this creates a balance due to be paid with the return

  8. Figuring Estimated Tax for 2007 • If it is expected that $1,000 or more will be owed on the 2006 and • Withholding and credits to be less than the smaller of 90% of 2007 tax or 100% of 2006 tax** • Use Form 1040ES to calculate estimated tax payments • All checks or money orders should be made payable to: “United States Treasury”

  9. Form W-4 and W-4P • These forms are used to tell payers how many withholding allowances the taxpayer is claiming • If there is a balance due on the 2006 return, the withholding may need to be adjusted • To change the withholding, a new Form W-4, or Form W-4P, should be completed and presented to the payer

  10. Completing and Assembling the Return • Confirm SSNs or ITINs on return • Paper returns must be assembled by “sequence number” • Form W-2 and/or Forms 1099 (federal copy) must be attached to Form 1040 for paper or Form 8453 for e-file • Site Identification Number – very important • Assigned by Territory Office • Proper location is in the paid Preparer Section

  11. Decedents • “Deceased” on the top of return, name and date of death • Married Filing Joint – surviving spouse enters “Filing as surviving spouse” in signature the area on either Form 1040 or Form 8453 • Single return – Personal representative signs and submits Form 1310 to claim a refund • Power of Attorney – attach to 1040 or 8453

  12. Combat Zone Provisions • Determine who qualifies for an extension of deadline • Identify special tax benefits that are available to persons who die in a combat zone or from a terrorist or military action. • Explain how to file claims of forgiveness

  13. Extension of Deadline • Actions extended • Length of extension • Requirements for the extension

  14. Decedents • Filing a return • Combat Zone Forgiveness • Military or Terrorist Actions

  15. Lesson Summary • Always try to establish a system of quality review at your site • If you are not already electronically filing returns, please consider this option • SIDN on all returns

  16. Comprehensive Course Problem & Exercises • Application of Tax Law • (Publication 678-W) • Basic Course • Intermediate Course • Advanced Course • Military Course • International Course

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