Federal Income Tax

1
Federal Income Tax

• CONT 110

2
Terms

• Adjusted Gross Income
• Adjustments to Income
• Earned Income Tax Credit
• Estimated Tax Payments
• Exemptions
• Health Savings Account (HSA)
• Individual Retirement Account (IRA)
• Itemized Deductions
• Standard Deductions
• Tax Credits
• Taxable Income
• Total Income

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Collect Information to prepare federal income tax

• Social Security Number
• Form W-4 (Employees Withholding Allowance
  Certificate)
• Form W-2 (Wage and Tax Statement)
• Annual 1099 form

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Calculate federal income tax using Form 1040EZ

• Used when
• Filing status is single or married filing
  jointly.
• You do not claim any dependents
• You do not claim IRAs, alimony paid, bad debt
  deduction, moving expenses, educator expense
  deduction
• You claim only the earned income credit
• Your taxable income is less than 100,000
• Taxable income Total income Standard
  deduction - Exemptions

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Calculate federal income tax using Form 1040EZ

• Example
• Brian Phillips is single and a student with only
  part-time wages and a small amount of interest
  income.
• STEPS
• Calculate the adjusted gross income
• 12,550 780 13,330
• Calculate the taxable income
• 13,330 - 8,950 4,380
• Find the income tax in tax tables
• 438
• Subtract to find the difference between the tax
  and the amount of taxes paid to see if additional
  tax or refund is due
• 1,005 - 438 567

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Tax table
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Calculate federal income tax using Form 1040A

• Used when
• You only had income from wages, tips, salaries,
  interest and ordinary dividends, capital gain
  distributions, taxable scholarship and fellowship
  grants, pensions, annuities, IRAs, unemployment
  compensation, taxable social security and
  railroad retirement benefits.

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Calculate federal income tax using Form 1040A

• Katherine Grayson is single. Complete Form 1040A
  for Katherine Grayson using her Form W-2 and her
  Form 1099-1NT. Katherine also has a 2,000 IRA
  contribution.
• STEPS
• Determine the personal exemptions
• Katherine is single, so she has one exemption
• Calculate the total income
• 18,950 752 19,702
• Calculate the adjusted gross income by
  subtracting 2,000 IRA contribution from the
  total income
• 19,702 - 2,000 17,702
• Subtract the standard deduction from the adjusted
  gross income
• 17,702 - 5,450 12,252
• Subtract any exemptions to find taxable income
• 12,252 - 3,500 8,752 taxable income
• Find the income tax in the tax tables 899
• Subtract the tax from the amount of taxes paid to
  find the amount of tax due or refund due
• 950 - 899 51 refund due

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Línea 38Form 1040A
Línea 7 Form 1040A
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Línea 8A Form 1040A
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Form W-2
Form 1099-INT
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Tax table
Form W-2
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438 Brians taxLínea 11 Form 1040EZ
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899 Katherines taxLínea 37 Form 1040A