what you need to know taxes. why are we taxed? number 1 reason: to raise revenue influence behavior...
DESCRIPTION
Taxes Fund Public Goods and Services National Defense Health Care for Elderly Social Services Public Education State and Local Police Financial AidTRANSCRIPT
What you need to know
Taxes
WHY ARE WE TAXED?
Number 1 reason: to raise revenueInfluence behaviorBe fair
Taxes Fund Public Goods and Services
National Defense
Health Care for Elderly
Social Services
Public Education
State and Local Police
Financial Aid
Property Taxes
•Levied on property, especially real estate
•Can also be levied on boats, RVs, business inventories•Fund schools, local services, welfare programs
Transaction Taxes
•Levied on economic Transactions (i.e. sales
tax)•Set on percentages or physical quantities
•Support state and local services
Payroll Taxes
State DollarsWhere you tax money goes
Social Services
21%
Government Administrative
4%
Education30%
Utility Expenditure
7%
Transportation 7%
Interest on General
Debt4%
Public Safety8% Environment
and Housing7%
General Expenditure
5%
Insurance Trust
Expenditure7%
The Federal Government Dollar- Where It Comes From
Excise, Customs, Estate, Gift, and Miscellaneous Taxes7%
Personal Income Taxes
43%
Social Security, Social Security, Medicare, and Unemployment and other Retirement Taxes36%
CorporateIncome Taxes
7%Borrowing to
Cover Deficit 6%
The Federal Government Dollar- Where It Goes
Medicare, andother Retirement
32%
DOD Military19%
Net Interest onthe Debt
7%
Homeland Security
1%
Social Security21%
Other 19%
Tax Terms
FICA-Federal Insurance Contributions Act. Funds Social Security, Medicaid, etc.
Earned Income--Income that you earn through work or effort
Gross Income--the amount you earn before any deductions
Tax Terms
Interest Income: Income received from interest earned on a savings account or investments.
Form 1099INT
Taxable Income: the amount of income that can be taxed
Earned income + Interest Income = Taxable income
Tax Liability--The amount of tax that you must pay.
Tax Terms
Standard Deduction--An amount fixed by the government which taxpayers can deduct from their gross income before their tax liability is determined.
Itemized Deduction--Deductions from your taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year.
Tax Terms
Dependent--A person who relies on someone else for support.
More dependents = more taken from each paycheck to meet tax liability
Tax FormsForm W-2 -- Shows your gross income for one year as
well as the gross amount of federal taxes & social security withheld. Should be mailed to you by Jan. 31.
Form W-4 -- A form that you complete to tell your employer how much money to take out of each paycheck in order to meet your tax liability. Fill out when you start a new job.
Form 1099 INT--the form that indicates the amount of interest earned for the year
HOW DO WE FILE?
OPTIONS:1. Electronic Filing including telefile, efile using a tax agency or
tax software2. Paper File 3. Let a professional do it all
Which is best for you?
Tax Rights
Voluntary compliance- Everyone must fileRight to appeal or review any tax decisionsRight to confidentiality and privacyHelp with unresolved tax problemsPay the exact amount-or payment plan
Factors Affecting Tax Liability
•Deductions: Expenses that can be deducted before determining taxable income
•Tax Credits: Amounts that can be deducted from taxes owed
•Tax Exemptions: A part of income on which no tax is imposed
WHEN DO WE NEED TO FILE?
Deadline: APRIL 15 is always the day the taxes need to be filed by unless the 15th falls on a Sunday or holiday.
Who needs to file?Any dependent who makes over $6,100.00Any non-dependent who makes over $10,150 Someone who makes under the legal limit, but still
wants to get their money that was withheld
Filing Options
Electronic Filing:Telefiling-- Only those who receive the package can utilize
this method. No pesky forms to fill out or mailEfile-- Often times this is free through a variety of agencies.
Software can be bought and reused.Security-- Forms stored long-term online in a database. If
you go through one of the approved IRS programs/agencies , there is virtually no risk. The risk is even less if you use a software program that stores the info on your computer
Filing Options
Paper File--Most confusing, but is always free. Forms available in a variety of places, must be postmarked by April 15th.
Professionally-- Fees are charged. Less chance of mistakes and the potential for a lower tax liability due to their knowledge.
WHERE CAN WE GO FOR HELP?
Online help at irs.govTax agenciesTeletax hotlineIRS help lineLibrary has tax professionals available on tax day