Filing the
Income
Tax
Taxman by The Beatles
Album: Revolver
Released: 1966
 This is a bitter song about how much money The Beatles
were paying in taxes. For every $20 earned, $19 went to the
government and Capitol Records. People with high earnings
pay exorbitant taxes in England, and as a result, The
Beatles - as well as The Who and The Rolling Stones spent a lot of time in America and other parts of Europe as
"tax exiles."
 George Harrison is quoted as saying, "Taxman was when I
first realized that even though we had started earning
money, we were actually giving most of it away in taxes."
TAXMAN BY THE
BEATLES - Lyrics
Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman, yeah, I'm the taxman
Should five per cent appear too small
Be thankful I don't take it all
'Cause I'm the taxman, yeah I'm the taxman
If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get too cold I'll tax the heat
If you take a walk, I'll tax your feet
Taxman!
'Cause I'm the taxman, yeah I'm the taxman
Don't ask me what I want it for (Ah, Mr. Wilson)
If you don't want to pay some more (Ah, Mr. Heath)
'Cause I'm the taxman, yeah, I'm the taxman
Now my advice for those who die
Declare the pennies on your eyes
'Cause I'm the taxman, yeah, I'm the taxman
And you're working for no one but me
Taxman!
Review: Why do we pay
taxes?
Purposes of Taxation

TAX: a required payment to a local,
state, or national government.
1.
2.
3.
4.
Fund public goods and services.
Influence behavior. (cigarette. alcohol)
Stabilize the economy.
Redistribute income.
Taxes in US History
Review: What are some
examples of taxes?
Kinds of Taxes
 Income tax: income that you earn is
subject to tax.
 Social Security tax: nation’s retirement
program; approximately 6% of gross
income.
 Medicare tax: nation’s health care
program for elderly and disabled; 1.45%
of gross income.
Kinds of Taxes
 Sales tax: tax paid on the value of goods
and services. (revenue for state govt.)
 Excise taxes: included in the price paid
by consumers.
 Fuel = Environmental
 Alcohol & Cigarettes = Health/Safety
Who Collects Federal
Taxes?
Internal Revenue Service
 (IRS) – Collects
federal taxes,
issues regulations,
and enforces tax
laws written by the
United States
Congress
How does the IRS collect
most of your income
taxes?
Income Taxes
 Your employer will
withhold, or take out,
income tax from
every paycheck and
send the money to
the government.
How Much is Withheld?
 Depends on:
 How much you earn
 Information you provide on Form W-4
determines how much is withhold
 Personal Information
 Exempt status
 Allowances: factors that affect the amount of
income tax withholding.
Do I have to file a return?
You are required to file a federal income tax
return if:
 Your income is above a certain amount.
 You are a citizen or a resident of the
United States.
 You are a U.S. citizen who resides in
Puerto Rico.
The amount of your income tax return is
based on your filing status and other factors,
such as your age.
Confusing forms!
Tax Time is Here!
 Must be filed
by April 15th
What Do I Need?
(Collecting Forms…)
 Form W-2: Employer will send
 Form 1099-INT: Bank will send
 Personal records
W-2 shows your total earnings for the year
and the total amount of taxes withheld.
Make sure all your information is correct
when you get this.
1099-INT: shows the earned interest on
savings during the year.
Other 1099 forms are used for reporting
earnings on investments.
What will I be asked?
1. Status:
 Single
 Married
 Allowances…
2. Income
 Includes interest earned
How can I reduce my
taxes to be paid?
 What things can you “write off of” you
taxes?
Deductions: subtracted from income






Charitable Contributions
Education
Casualty, Disaster, and Theft Losses
Business use of home
Business use of car
Employee business expenses
 Standard vs. Itemized
 Tax credits
 Subtracted directly from the amount of tax
owed.
 Ex: Energy Star Appliances, Insulation, Roof,
Water Heater
Taxable income is different from
your gross income because it is
the amount after certain
deductions.
Final calculations: if you have
overpaid in taxes for the year,
you’ll get a refund, if you’ve
underpaid ,you must send the
remaining tax to the IRS with your
return.
Options for Filing Income TAX
 Turbo Tax
 Tax Prep Service
 H&R Block
 Liberty Tax Service
 Accountant
 Paper Forms:
 1040EZ
 1040
 1040 A (LONG)
Do you have a simple tax
return? You do if you:





Have a filing status of Single or Married Filing Jointly
Have no dependents/children
Claim the standard deduction
Have no mortgage payment
Have taxable income of less than $100,000
You can use the 1040 EZ!
Final result
 Either you, or your tax preparer, will
determine whether you overpaid or
underpaid your federal (and state)
income taxes.
 What is the result if you overpaid?
 What about if you underpaid?
 How again could you overpay or underpay?
Preparing an Income Tax Return
Choosing the Tax Form
The IRS offers about 400 tax forms and
schedules. However, you have a choice of
three basic forms:
 Form 1040EZ
 Form 1040A
 Form 1040
Form 1040 is an expanded version of Form
1040A.
Personal Finance
Unit 4 Chapter 12 ©
Preparing an Income Tax Return
Form 1040EZ
Form 1040EZ is the simplest tax form to complete.
You may use this form if:
 Your taxable income is less than $100,000.
 You are under age 65.
 You claim no dependents.
 Your income consisted of only wages,
salaries, and tips, and no more than $1,500 of
taxable interest.
 You will not itemize deductions, claim any
adjustments to income, or claim any tax
credits.
Personal Finance
Unit 4 Chapter 12 ©
Preparing an Income Tax Return
Form 1040A
You may use this form if:
 Your taxable income is less than $100,000.
 Capital Gains distributions, but no Capital
gains/losses (from sale of investments)
 You will not itemize deductions
 Claim tax credits for child/dependent care,
education, earned income, retirement savings
contributions.
 Deductions for student loan interest, educator
expenses, higher education tuition and fees
Personal Finance
Unit 4 Chapter 12 ©
Preparing an Income Tax Return
Form 1040
You may use this form if you are not able to use
the other two forms:
 Your taxable income is greater than
$100,000.
 Income from interest and dividends over set
limits
 Income from the sale of property
 You will itemize deductions (schedule A)
 Home mortgage interest
 Medical/dental expenses
Personal Finance
 Real estate property tax
Unit 4 Chapter 12 ©