This essay Understanding Taxes Worksheet has a total of 1038 words and 7 pages.
University of Phoenix Material
Understanding Taxes Worksheet
Resources: The United Stated Internal Revenue Service at www.IRS.gov
Directions: Use the links provided for each tax form and the class text to answer the questions below. If a word count is required for the question it will be listed in that question.
Understanding the 1040 Forms
Visit The 1040A form at http://www.irs.gov/pub/irs-pdf/f1040a.pdf. The 1040EZ form at http://www.irs.gov/pub/irs-pdf/f1040ez.pdf . And the 1040 form at http://www.irs.gov/pub/irs-pdf/f1040.pdf.
1. Compare and contrast the 1040, 1040A, and 1040EZ forms. How is each form different? Who would or must use each form? Which form did you use in your last filing? (Answer in at least 50 words.) 1040EZ If you have dependents listed on your return you cannot use Form 1040EZ as there is no place to list those dependents. You can claim certain tax credits using Form 1040A, including the credit for child and dependent care expenses, credit for the elderly or the disabled, education credits, retirement savings contribution credit, child tax credit, earned income credit, and additional child tax credit. Form 1040A is not as complex as Form 1040, but is longer than 1040EZ. Form 1040A allows you to claim a number of deductions that you are not able to on 1040EZ
I use the 1040 which I belive most people do because most people have dependents.
Read more: What\'s the difference between IRS Forms 1040EZ and 1040A? http://www.investopedia.com/ask/answers/071514/whats-difference-between-irs-forms-1040ez-and-1040a.asp#ixzz3rqcmea00
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2. Who is eligible to file with “head of household” status; what is the criteria? What are the benefits of filing as head of household rather than single? (Answer in at least 50 words.) Were unmarried as of December 31 and Paid over half the cost to run your home or the home of a qualifying parent in 2015 and supported a qualifying person. One big advantage to qualifying for the head of household filing status is the larger standard deduction over single filers. The tax rates applied to calculate your tax bill are lower if you file using the head of household filing status rather than the single filing status.
3. What is adjusted gross income (AGI) and what line of the 1040A shows this amount? On which line of the 1040A tax form is total income located? Adjusted Gross Income is defined as gross income minus adjustments to income. It is found on line 21
4. What lines would student loan interest deductions and tuition and fees be located on the 1040A form? What form is used to help with a student’s tuition and fees? Line 33 form 1098-t
5. What is a tax credit? What is a tax deduction? Be sure to define the difference between the two. A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit from the total they owe the state. Tax deduction is a reduction of income that is able to be taxed, and is commonly a result of expenses, particularly those incurred to produce additional income. The difference between deductions, exemptions and credit is that deductions and exemptions both reduce taxable income, while credits reduce tax. So a tax deductions reduce taxable income and Tax credits provide a dollar-for dollar reduction.
Visit W-2 Wage and Tax Form at http://www.irs.gov/pub/irs-pdf/fw2.pdf.
6. What is the primary purpose of the W-2 Wage and Tax Forms? The IRS requires employers to report wage and salary information for employees on Form W-2. Your W-2 also reports the amount of federal, state and other taxes withheld from your paycheck. As an employee, the information on your W-2 is extremely important when preparing your tax return. To insure you have it in time, the IRS requires your employer to send you a W-2 no later than January 31 following the close of the tax year,
7. When does a taxpayer receive the W-2? Who will provide this form to the taxpayer? Taxpayers should receive a Form W-2 from each employer by January 31
8. What items on the W-2 make up Federal Insurance Contributions Act or FICA? The Federal Insurance Contributions Act (FICA) provides for a federal system of old-age, survivors, disability, and hospital insurance. The old-age, survivors, and disability insurance part is financed by the social security tax. The hospital insurance part is financed by the Medicare tax. Each of these taxes is reported separately. Generally, you are required to
Topics Related to Understanding Taxes Worksheet
Taxation in the United States, Tax forms, Tax credits, Form, Taxation, IRS tax forms, Income tax in the United States, Earned income tax credit, Tax return, Tax deduction, Adjusted gross income, Federal Insurance Contributions Act tax
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