1040
 Your Total Income is $9,075 (this amount changes) or
more ($6,200 if you are a dependent)
 Earned Income
 Unearned Income
OR
 Self-Employed & your Total Profit is More Than $400
 April 15th unless that date falls on a weekend or holiday
 1040 EZ OR 1040 A OR 1040
 Wages or salaries
 Commissions
Earned Income is
Generally
Shown on a Form
 Tips
 Fringe benefits and stock options
 Paid Sick, Holiday & Vacation Days
 Bonuses
 Health & Life Insurance
 Retirement Contributions
 Workman’s Compensation
W-2
Or
1099-MISC
 Interest from a Savings Account
 Interest from Bonds
 Dividends from Stock
1099-INT; 1099-DIV
 Gains from Selling Investments
 Income from Rental Property
 Gifts & Inheritance
Nothing
 Prizes
 Money from Retirement Fund
 Royalties
 In-Kind & In-Cash Transfers
Other 1099 Forms
Money Spent/Invested That Lowers a Tax Payers
Total Income
 Moving Expenses if Related to Your Present Job or
Starting a New Job
 Retirement Account Investments
 Tuition and Fees
 Student Loan Interest
 Total Income – Income Adjustments
 Who’s a Dependent? For Tax Purposes?
 Someone Who Lives with You More Than ½
the Year
&
 Under 19, or 24 if student
&
 Did Not Provide Over Half his/her own
Support
&
 Is Not Filing a Joint Return unless only for a
refund
Exemptions Worth $3,950 for 2014
(this amount changes) For Each:
 Tax Payer
 Dependent
 Over 65
 Blind
NOTE:
 Exemptions Lower AGI (Adjusted Gross
Income)
Income is Lowered Also By:
 Standard Deduction (amounts change)
 $6,200 for Single
 $12,400 for Married Filing Jointly
OR
 Itemized Deductions—Schedule A
NOTE:
 Use whichever is Larger
Itemized Deductions-Schedule A-Examples
 Medical & Dental Expenses (Limited)
 Real Estate Taxes Paid
 Vehicle Taxes from Registration
 Donations of Money or Goods
 Safe Deposit Box Fees
 Union Dues
 Losses Due to Theft, Vandalism, Fire, Storm (Limited)
 Cost of Special Tools, Uniforms, or Protective Clothing
(Limited)
 Business Use of Home (Home Office) (Limited)
Tax Credit
 Lower Tax Amount
 If Tax Amount is Zero, Can Give a
Refund
More Valuable Than Deductions
You owe $1,003 in tax. You are eligible for
either a $1,000 tax deduction or a $1,000
tax credit. Which would you choose?
Tax Credit
Tax Credits are More Valuable Than DeductionsHow?
$1000 Deduction—If your Original Income was
$9,480, your tax is $1,003
When you deduct the $1000,
$9,480 - $1,000=$8,480 is your new income
Your new tax is $853
so you saved $150
$1003-$853=$150
Tax Credits are More Valuable Than DeductionsHow?
$1,000 Credit—These are taken AFTER you
calculate your tax
Your tax on $9,480 is $1003
When you take a $1,000 credit
Your new tax is $3
$1,003 - $1,000=$3
Which is a savings of $1,000
Tax Credit Examples
 Child Care Expenses
 American Opportunity Credit for
College
 Children Under 18 Who Live With You
 Home Energy Savings
 First-Time Homebuyer
 Lower Income Families
 National Defense (Wars)
 Social Security
 Medicare/Medicaid
 Interest on the National Debt
 President , Senators and House Representatives
 All White House Workers
 Agriculture
 Foreign Affairs
 Veteran Benefits
 Environmental and Natural Resources
 Education
 Public Transportation
 Fire Fighters & Police Officers
 Road & Traffic Light Repair
 Capitol & Government Building Maintenance
 Congress, Governors, Mayors, State Representatives
 All Government Workers
 Garbage Collecting
 Healthy Drinking Water
 How Tax Money is Used
 Vote
 Created in 1913
 16th Amendment Gave Congress the
Power to Tax
 In 1916, Congress changed the text of
the income tax law, removing the word
"lawful" from "lawful business"
 Now ALL income, whether attained by
legal means or not, was taxable.
 Because of this, many criminals who
were guilty of other infractions were
sent to prison for tax evasion.
 Income
 Payroll
 Unemployment State & Federal
 ½ of Medicare & Social Security
 Sales
 Real Estate
 Personal Property
Tax Preparation or Help
 Certified Public Accountant (CPA)
 H & R Block
 IRS
 Tax Programs
If you have a professional complete taxes, make sure they
sign off on the return.
If they make a mistake, the will at least cover your
penalty and interest.
 Social Security Administration keeps track of your
earnings to determine benefits you will get when
retire, become disabled, or die and survivors get.
 IRS uses it to identify you