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LET’S PRACTICE
Name: _____________________________________________________________________________
Fun with FORM 1040EZ Every year, on or before April 15, Tax Day, taxpayers all over America must file their income tax returns with the IRS. There are a variety of IRS forms and paying taxes gets more complicated as your income and wealth increase. As a young taxpayer without dependents or much investment income you will probably use Form 1040EZ to file your taxes. The 1040EZ discloses to the IRS how much money you made in the prior calendar year, how much was withheld by your employer in federal income taxes pursuant to your W-4 instructions, and calculates whether you owe any additional taxes. If you overpaid, it tells you how much $$ you will get back in a tax refund. Let’s practice filling out a Form 1040EZ. You’ll see that it's not so hard. Complete the name and address section, using social security number 000-00-0000. Refer to the following data to complete the remainder of the form: INCOME Line 1. Good job! Your W-2 shows you made $42,000 this year in base salary plus a performance bonus of $2500. You also earned $2580 in freelance income as reported by Form 1099. Total your income and write the amount on line 1. Line 2. Good job! You invested $5000 in a CD this year. The interest rate is pretty low, so you earned only $60 in taxable interest. Write that amount on line 2. Line 3. You received no unemployment income and you don’t live in Alaska. Write $0 on line 3. Line 4. Go ahead! Calculate your adjusted gross income . Line 5. Read the directions. You are still single and no one is claiming you as a deduction. Enter $10,300. Line 6. Calculate your taxable income by deducting line 5 from line 4. Write the amount on line 6. PAYMENTS CREDITS AND TAX Line 7. The W-2 your employer sent to the IRS shows that $5,425 was withheld from your paycheck in federal taxes. 36,000 single taxpayer married taxpayer PRODUCT PREVIEW
36,000 36,050 36,100 36,150 36,200 36,250 36,300 36,350 36,400 36,450 36,500 36,550 36,600 36,650 36,700 36,750 36,800 36,850 36,900 36,950
36,050 36,100 36,150 36,200 36,250 36,300 36,350 36,400 36,450 36,500 36,550 36,600 36,650 36,700 36,750 36,800 36,850 36,900 36,950 37,000
4,950 4,958 4,965 4,973 4,980 4,988 4,995 5,003 5,010 5,018 5,025 5,033 5,040 5,048 5,055 5,063 5,070 5,078 5,088 5,100
4,496 4,504 4,511 4,519 4,526 4,534 4,541 4,549 4,556 4,564 4,571 4,579 4,586 4,594 4,601 4,609 4,616 4,624 4,631 4,639
Lines 8 a and b. You have earned neither of these. Enter 0 on line 8. Line 9. Enter the total tax payments and credits from line 7 on line 9. Line 10. What’s your taxable income? (Line 6) Using that number, check the table on the right (single taxpayer column) to find your tax liability . Write it on line 10. Line 11. You did not provide your own medical coverage under the Affordable Care Act. 0 goes here. Line 12. Add lines 10 and 11 to find your total tax . Line 13. Is line 9 is larger than line 12? If so, subtract line 12 from line 9 to find your refund. Line 14. If line 12 is larger than line 9, subtract line 9 from line 12 to see how much more you owe in federal income taxes. Circle one: I owe more I get a refund of ________!
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Chapter 5 | Honey, They Shrunk My Paycheck
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