chapter 7 federal income tax “in the world nothing can be said to be certain but death and...

Chapter 7Federal Income Tax

“In the world nothing can be said to be certain but death and

taxes.” - Ben Franklin

Types of Taxes

The Govt. raises ________ by taxing U.S citizens and businesses.

______ _______ states that those with high incomes should pay more taxes (ability-to-pay principle).

3 types of taxes

Progressive Taxes Definition:

Example:

Regressive Taxes Definition:

Example:

Excise Taxes-

Proportional Taxes Definition:

Example:

Note:

Uses for tax revenues Local Level

Education Parks and

playgrounds Roads Police Dept. Fire Dept. Health Dept.

National Level Salaries for

Congress National defense Highways Wildlife refuges Welfare Foreign aid

IRS I______ R______ S______ Agency of Dept. of the _________ Main Functions:

The Power to Tax Power to levy taxes rests with ____________

Bills for raising revenue begin in the ________ ___ _________________

The ___________________________studies proposals and makes recommendations to the full House.

Bills must pass a vote in both the House and Senate and then be signed by the _______ before becoming law.

Paying Your Fair Share Tax brackets =

Voluntary compliance –

Taxes are due by _______ Tax evasion -

An IRS Audit Audit –

Taxpayers can represent themselves or have a representative like a lawyer, accountant, or agent

Audits involve confirming __________ ____________.

Filing Status your tax booklet has complete

descriptions of each status and how to qualify.

Exemptions Exemptions -

You are automatically allowed one exemption for yourself.

Exemption amount for 20___ is $_____

Gross Income Gross income -

Other Taxable Income Winnings from

Gambling Bartering

Income Pensions and

Annuities Rental Income Royalties

Estate and Trust Income

Income from the Sale of Property

Employer-reimbursed Tuition

Items NOT Taxable Items that are not taxable and not

part of gross income include:

Finding Final Taxable Income

Gross Income- Adjustments Adjusted Gross Income- Standard Deduction or Itemized

Deductions- Exemptions

Taxable Income

Tax Return Terms Adjustments –

Deductions -

Itemize –

Tax Return Terms Standard Deduction –

Exemptions –

Taxable Income -

Tax Credits –

Preparing to File Forms will be either _____, _____, or ____

If you did not earn enough to file but you had taxes withheld, you need to file to get a return.

You must file by April 15th of the year after you earned income.

Forms 1040EZ (Short Form) -

1040A (Short Form) -

1040 (Long Form) -

To Begin, You Will Need

Filing Electronically 1040EZ and 1040A forms can be filed at

www.irs.gov You can pay any taxes owed

electronically also at this site. If you are owed a refund, filing

electronically will enable a quicker processing of you refund check.

If you file electronically make sure you print a copy of the return.

1040EZ Example #1Georgina B. Bales (SS# 541-33-9892)485 West 11th Ave.Ogden, UT 87667

Georgina is a clerk at a local store. She earned $16,500 last year from her job, plus $200 interest on her savings account. She had $1,016 withheld in federal income tax last year. She is single and no one can claim her as a dependent.

Form 1040EZ

1040EZ Example #2Brian Smith (SS# 354-58-6102)1927 Peach LaneSummerville, CO 97153

Brian is 16 and had a part-time job after school. He is single and his parents claim him as a dependent. Brian earned $2,675 last year from his job. He had no taxable interest. Brian had $257 withheld in taxes.

Form 1040EZ

1040EZ Example #3Use your own information (do not include SS#)

You are single and your parents claim you as a dependent. Last year you made $6,542 at your part-time job and had $524 withheld for federal income tax. You earned $46 interest on your savings account.

Form 1040EZ