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

• Taxable income must be below $100,000

• Must be single or married filing jointly

• No dependents

• Interest income less than $1,500

Interest Income

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

1099-INT

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

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

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

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

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

Making Work Pay Credit

• Temporary tax credit

• Worth $400

• Must not be claimed by someone as a dependent to be eligible.

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

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

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.

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

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.