3.1.8 Tax Forms and Filings

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Tax Brackets and Marginal Tax Rates

What will you learn in this lesson? - compare the advantages and disadvantages of tax preparation approaches - describe the purpose of the W-4 Form - distinguish between various tax forms

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Starting a New Job When you start a job, you fill out W–4 and I–9 forms. The W– 4 form is used to set up payroll tax deductions and records your: - name and address; - Social Security number; and - income tax filing status. The I–9 form proves employment eligibility in the U.S.

Federal Income Tax Process

Employment Earnings Your employer sends you a W–2 form to summarize your yearly income and tax payments. You may also use 1099 forms, receipts, and other income records when you prepare your taxes.

Federal Income Tax Process

Completing Your Income Tax Form Using your records, you complete tax Form 1040, the form used to file federal income taxes for individuals. Once complete, you submit Form 1040 and any supplemental forms to file taxes. If you owe taxes, you include your payment in the tax submission.

Federal Income Tax Process

IRS Review The IRS checks your income records and calculations. - If there are errors, the submission is rejected and needs to be fixed. - If there are no errors, the tax return is processed. Once accepted, the IRS will either process your payment or issue your refund.

Federal Income Tax Process

Tax Professionals You can also choose to have a tax company, online tax professional, or an accountant assist you in preparing your taxes. These services can be free for simple returns. For other tax situations, these services may cost anywhere from $100 to $1000 depending on your situation and how long it takes to prepare your taxes. This method does not require you to complete the tax forms, but it can be expensive. There may also be delays in completing taxes if your tax preparer is busy.

Electronic Filing and SoftwareYou can use the Free File electronic filing options from the IRS website if you have an adjusted gross income (AGI) below a certain amount, currently set at $79,000. This version contains the most commonly used tax forms but does not have all forms. Alternatively, you can purchase software to electronically file, if you have an AGI above the required amount or if you have a more complex tax situation. Tax software typically costs between $40 and $180 depending on the features included.

File by Mail You can use Form 1040 and complete it using a computer or by printing a copy and filling it in by hand. This can then be sent through the mail. If you choose this option, it will take the IRS longer to process the return once it has been received. So, if you are due a refund, it will likely be delayed.

Methods for Filing

Which tax submittsion method would you choose?

Samantha would owe $1,100 plus 12% exceeding over $11,000. Excess income tax: $23,750 - $11,000 = $12,750 $12,750 x .12 = $1530 Total tax: $1530 + $1100 = $2630

Samantha files taxes as a single individual. She has a taxable income of $23,750. How much does she pay in taxes?

Tax Schedule Review

Seth files as a single individual. He has a taxable income of $60,270. According to the IRS tax tables, what is the federal income tax Seth will owe?

Tax Tables

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