6.4 - Tax Filing Process

W-4 Form

Filled out by you and given to your employer

Employer uses it to identify how much to withhold from your paycheck for income taxes

W-4 asks stuff like

• Filing Status (married vs separately)

• Dependents

W-2

Form W-2, or the Wage and Tax Statement, is an annual summary of your total wages earned and all taxes withheld by your employer during the calendar year.

What is a Tax Return?

Allows govt to check its work and make sure it did not withdraw too much throughout the year

Tax Season

process of filing your tax return

Must do state and federal

Tax Refund

govt withdrew too much and you get money back

What Info Do You Need to File a Tax Return?

Need to have completed 1040 Form and sent back to IRS

Income

Reported on W-2 and 1099

Records of expenses for deductions

Receipts

Credit card statements

Bank Account/Routing #s

Tell where to send your refund

Tax Credits:

Provide money back on taxes

Reduce amount of tax you owe

$ for $

Like a coupon

Tax Deductions:

Reduces your taxable income

Lowers how much is even eligible to be taxed

Save less than credits

Standard Deduction

a fixed amount set by the IRS that taxpayers can subtract from their adjusted gross income (AGI) to reduce their taxable income.$12,000 dollars

Flat/fixed rate

Itemized Deduction

Designated expenses can be deducted

Charitable giving, educator expenses, insurance

Usually standard is better