Transcript BASIC TRAINING SCOPE OF BASIC TRAINING VIDEO INTERLUDE: THE INTERVIEW TAX OVERVIEW.

BASIC TRAINING
SCOPE OF BASIC TRAINING
VIDEO INTERLUDE:
THE INTERVIEW
TAX
OVERVIEW
income
- shelters
taxable income
* tax rate
TAX DUE
income
shelters
tax
WAYS TO SHELTER
INCOME
WAYS TO SHELTER INCOME
– DEDUCTIONS
• above-the-line
• below-the-line
–standard
–itemized
 1040 ONLY!
– EXEMPTIONS
– CREDITS
• refundable
• nonrefundable
WAYS TO SHELTER INCOME
reductions to taxable income
EXEMPTIONS
reductions to tax due
DEDUCTIONS
above-the-line
CREDITS
below-the-line
standard
available on:
refundable
itemized
threshold
examples:
nonrefundable
unlimited
2%
7.5%
flat amount per dependent
IRA
student loan interest
by filing status
miscellaneous
medical
mortgage interest
taxes paid
dependent
care
(child tax credit)
EIC
ALL FORMS
1040A & 1040
ALL FORMS
1040 ONLY
1040 ONLY
1040 ONLY
1040A & 1040
ALL FORMS
(but every longer form
adds more credits)
DEDUCTIONS
(from 1040)
• abovetheline
IRA
contribution
student loan
interest
tuition & fees
DEDUCTIONS, continued
• below-the line
– standard
– itemized
(from 1040)
EXEMPTIONS
(from 1040)
$3,650 per person
BUT, IF YOU’RE A DEPENDENT:
CREDITS: THE BEST!
REDUCE $ TAX!
THE BEGINNING
IDENTIFICATION
IDENTIFICATION
ITIN
• used in place of SSN for nonresidents
• looks like a SSN, but starts with 9
• means taxpayer
NOT ELIGIBLE FOR EIC
• can e-file return: use ITIN
• do NOT change SSN
on W-2
DO YOU HAVE TO FILE A
RETURN?
WHAT’S IMPORTANT?
• age
• gross income
• filing status
• and…
from intake sheet, p.1
DO YOU HAVE TO FILE?
FILING
STATUS
5 CHOICES
•
•
•
•
•
single
married, filing jointly
married, filing separately
head of household
qualifying widow(er)
 
RELATIVE!
EXEMPTIONS
TYPES OF EXEMPTIONS
•personal
•dependency
TYPES OF
DEPENDENCY EXEMPTIONS
qualifying:
•CHILD
•RELATIVE
QUALIFYING CHILD
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
younger than you
 NEW!
relationship (relative or descendent)
age (19/24/disabled)
DID NOT PROVIDE MORE THAN ½ OF OWN
SUPPORT
residence (with you more than ½ the year)
citizen
married?
MFJ?
a qualifying child of another person?
are YOU a dependent?
QUALIFYING RELATIVE
your qualifying child? or anyone else’s?
relative?
lived with you all year?
citizen?
have gross taxable income < $3,650?
DID YOU PROVIDE MORE THAN ½
SUPPORT?
7. MFJ?
8. a qualifying child of another person?
9. are YOU a dependent?
1.
2.
3.
4.
5.
6.

1. PARENT
2. LIVE WITH
LONGER
3. HIGHER AGI
ONLY ONE PERSON CAN
CLAIM CHILD FOR:
•
•
•
•
•
•
dependency exemption
child tax credits
HOH filing status
credit for childcare expenses (2441)
exclusion for dependent care benefits
EIC
PERSONAL EXEMPTIONS
YOURSELF
• unless dependent
YOUR SPOUSE
• if MFJ + can’t be claimed by someone else
• if not joint, but spouse
– no income
– not filing
– not dependent
MIDWESTERN DISPLACED
INDIVIDUALS
• $500/person housed; max of 4 people
SELECTING THE PROPER FORM
YES
1040EZ
LESS
THAN
$100,000?
NO
NO
DEPENDENTS?
YES
1040A
NO
ITEMIZING?
YES
follow the path to form 1040EZ!
if you itemize, you use form 1040
1040
INCOME!
WAGES,
SALARIES,
TIPS
2222
a Employee's social security number
765-33-1093
b Employer identification number (EIN)
91-7366205
c Employer's name, address, and ZIP code
Games 'R' Us
77356 Chess Street
Redmond, WA 98165
OMB 1545-0008
1 Wages, tips, other compensation
$ 2400.00
3 Social security wages
$ 2400.00
5 Medicare wages and tips
$ 2400.00
7 Social security tips
d Control number
9 Advance EIC payment
e Employee's first name and initial
Persephone
Last name
Suff.
10 Dependent care benefits
11 Nonqualified plans
12a
13 Statutory
employee
12b
Falken
14 Other
f
2 Federal income tax withheld
$ 225.00
4 Social security tax withheld
$ 148.80
6 Medicare tax withheld
$ 34.80
8 Allocated tips
Employee's address and ZIP code
17 JSF Lane
Retirement Third-party
plan
sick pay
12c
12d
Seattle, WA 98118
15 State Employer's state ID number
16 State wages, tips, etc.
17 State income tax 18 Local wages, tips, etc. 19 Local income tax
20 Locality name
Department of the Treasury--Internal Revenue Service
Wage and Tax
Form
2009
W-2 Statement
Copy B-- To Be Filed With Employee's FEDERAL Tax Return.
This information is being furnished to the Internal Revenue Service.
INTEREST
IN BASIC SCOPE:
•
•
•
•
•
•
wages, salaries, tips
interest
dividends
unemployment
Social Security
gambling winnings
(LINE 7)
(LINE 8)
(LINE 9)
(LINE 19)
(LINE 20)
(LINE 21)
DIVIDENDS
2009 FORM 1099-DIV
VanguardGROUP
THE
Dividends and Distributions
Stephen and Persephone Falken
17 JSF Lane
Seattle, WA 98118
Recipient's Taxpayer Identification Number
453-02-2864
765-33-1093
This is important tax information and is being furnished to the Internal
Revenue Service. If you are required to file a return, a negligence penalty
or other sanction may be imposed on you if this income is taxable and
the IRS determines that it has not been reported.
DEPARTMENT OF THE TREASURY -- INTERNAL REVENUE SERVICE
Fund Name
Box 1a:
Total
Ordinary
Dividends
Fund's Fed.
I.D. No.
Box 2a:
Box 1b:
Qualified
Dividends
Total Capital
Gains Distr.
Recipient's
Acct. No.
Box 2b:
Box 2c:
Qualified
5-year Gain
Box 3:
Unrecap.
Sec. 1250
Gain
Box 4:
Nontaxable
Distributions
Box 6:
Federal
Income
Tax
Withheld
Foreign Tax Paid
SMALL-CAP VALUE INDEX
$1,405.66
$750.65
$604.32
$0
$0
$0
$0.00
$0
$0
$0
$0
$0
$0
$100.84
INTERNATIONAL VALUE INDEX
$1,204.55
FORM 1099-DIV
OMB NO. 1545-0110
$65.00
DIVIDENDS
TD AMERITRADE
2009 CONSOLIDATED 1099
Stephen Falken
Tax Identification Number:
453-02-2864
17 JSF Lane
Account Number:
736-02834110
Seattle, WA 98118
This is important tax information and is being furnished to the I nternal Revenue Service (I RS).
I f you are required to file a return, a negligence penalty or other sanction may be imposed on
you if this income is taxable and the I RS determines that it has not been reported.
Ameritrade, I nc.
Form 1099-DIV Dividends and Distributions
(OMB No. 1545-0110)
Line #
Category
Amount
1a
Total Ordinary Dividends
$166.10
1b
Qualified Dividends
$149.98
2a
Total Capital Gain Distributions (Includes Line 2b, 2c, 2d)
$0.00
2b
Unrecaptured Section 1250 Gain
$0.00
2d
Collectibles (28% Gain)
$0.00
3
Nontaxable Distributions
$0.00
4
Federal Income Tax Withheld
$0.00
5
Investment Expenses
6
Foreign Tax Paid
7
Foreign Country or U.S. Possession
8
Liquidation Distribution - Cash
$0.00
9
Liquidation Distribution - Noncash
$0.00
$0.00
$10.47
Form 1099-B Proceeds From Broker & Barter Exchange Transactions
See Details
(OMB No. 1545-0715)
Line #
Category
1a
Date of Sale or Exchange
See Details
Amount
1b
CUSIP No.
See Details
2
Stocks, Bonds, Etc. Reported to IRS
$1,338.05
- Gross Proceeds Less Commissions and Option Premiums
4
Federal Income Tax Withheld
5
No. of Shares Exchanged
6
Classes of stock exchanged
See Details
7
Description
See Details
569
REGULATED FUTURES CONTRACTS
8
Profit or (loss) realized in 2008
$0.00
9
Unrealized profit or (loss) on open contracts - 12/31/07
$0.00
10
Unrealized profit or (loss) on open contracts - 12/31/08
$0.00
11
Aggregate profit or (loss)
$0.00
Page 1 of 2
DIVIDENDS
STOCK YOU HOLD DIRECTLY
dividends
capital gains
ordinary
qualified
line 9b
(a subset)
short-term
long-term
Part I
Schedule D
Part II
Schedule D
other
line 9a
(full amount)
If your ordinary dividends are more than $1,500, you must also report them in Part II of Schedule B.
STOCK YOU HOLD THROUGH MUTUAL FUNDS
dividends
capital gains
ordinary
qualified
line 9b
(a subset)
short-term
long-term
line 9a
(treated as
ordinary
dividends)
line 13
Schedule D
other
line 9a
(full amount)
If the only
capitalgains
gains you
have
come come
from mutual
funds,
you skip
Schedule
D and
If(Note:
the only
capital
you
have
from
mutual
funds,
skip
write your gains on line 13 of the 1040 form.)
Schedule D and write gains on line 13 of the 1040 form.
SOCIAL SECURITY
UNEMPLOYMENT
TIPS
MUST REPORT
WINNINGS
GAMBLING
LOSSES ARE
ITEMIZED
DEDUCTION, UP
TO WINNINGS
GAMBLING
ADJUSTMENTS TO INCOME
(above-the-line deductions)
FROM INTEREST
STATEMENT:
STANDARD DEDUCTION
• based on filing status
STANDARD DEDUCTION
• based on filing status
• limits for dependents
STANDARD DEDUCTION
• based on filing status
• limits for dependents
INCREASED IF:
STANDARD DEDUCTION
• based on filing status
• limits for dependents
INCREASED IF:
– 65 or older
STANDARD DEDUCTION
• based on filing status
• limits for dependents
INCREASED IF:
– 65 or older
– blind
STANDARD DEDUCTION
• based on filing status
• limits for dependents
INCREASED IF:
– 65 or older
– blind
– paid real estate taxes
STANDARD DEDUCTION
• based on filing status
• limits for dependents
INCREASED IF:
– 65 or older
– blind
– paid real estate taxes
– purchased a new motor
vehicle
max = $500 ($1,000)
$49,500 max
phased out:
MAGI $125,000/$250,000
CREDITS
IN BASIC SCOPE:
•
•
•
•
•
•
•
•
child & dependent care
(LINE 48)
child tax credit
(LINE 51)
additional child tax credit (LINE 65)
retirement savings contribution
(LINE 50)
making work pay
(LINE 63)
government retiree
(LINE 63)
EIC
(LINE 64)
credit for elderly or disabled
(LINE )
IN BASIC SCOPE:
•
•
•
•
child & dependent care
(LINE 48)
child tax credit
(LINE 51)
additional child tax credit (LINE 65)
retirement savings contribution
(LINE 50)
• making work pay
(LINE 63)
• government retiree
(LINE 63)
• EIC
(LINE 64)
nonrefundable
IN BASIC SCOPE:
•
•
•
•
child & dependent care
(LINE 48)
child tax credit
(LINE 51)
additional child tax credit (LINE 65)
retirement savings contribution
(LINE 50)
• making work pay
(LINE 63)
• government retiree
(LINE 63)
• EIC
(LINE 64)
refundable
CHILD &
DEPENDENT
CARE
CHILD
TAX
CREDIT
17 
CHILD:
MAGI phaseout
BUT WAIT:
THERE’S MORE!
ADDITIONAL CHILD
TAX CREDIT
RETIREMENT SAVINGS
CONTRIBUTION CREDIT
or E, F, G,
H, AA,
BB, or S
RETIREMENT SAVINGS
CONTRIBUTION CREDIT
RETIREMENT SAVINGS
CONTRIBUTION CREDIT
RETIREMENT SAVINGS
CONTRIBUTION CREDIT
MAKING
WORK PAY
&
GOVERNMENT
RETIREE
MAKING WORK PAY
•
•
•
•
up to $400/$800
fully refundable
6.2% of earned income
MAGI phaseout $75,000/
$150,000
• has been reflected throughout
year as lower withholding
• EVERYONE MUST CLAIM!
CREDIT
FOR
ELDERLY
OR
DISABLED
EARNED
INCOME
CREDIT
UP TO
$5,657
does not have to be dependent
cannot be noncustodial parent
THANK YOU!
MEDICARE
UNIVERSITY OF WASHINGTON- EMPLOYEE EARNINGS STATEMENT
Employee I.D. No./Name
877-006-801
STEPHEN R. FALKEN
Gross Pay
Current
2,450.00
YTD
6,450.00
Current Deductions
SOCIAL SECURITY
MEDICARE
FEDERAL W/H T
MED AID/WKCMP
Pay Period Ending
8/15/2009
Check Number
Federal Tax Code
S00
Reductions Taxable Gross
Taxes
0.00
2450.00
633.78
0.00
6450.00
Amount
Type of Pay
Distribution
-151.90 HOURLY
09-9413
-35.53
-446.35
-3.50
Home Department/Unit Number
OPERATING RESOURCES
74-4630 0011
Deductions
3.50
Units
61.25 HRS
Year-To-Date Deductions
SOCIAL SECURITY/MEDICARE
FEDERAL WITHHOLDING TAX
120046
P
Check Number
P120046
Net Pay
1812.72
GROSS AMOUNT
2,450.00
Amount
493.43
1,114.05
NONNEGOTIABLE AFTER SIX (6) MONTHS
• 1.45% for both employee and employer
(2.9% total)
• no salary limit
SOCIAL SECURITY TAX
UNIVERSITY OF WASHINGTON- EMPLOYEE EARNINGS STATEMENT
Employee I.D. No./Name
877-006-801
STEPHEN R. FALKEN
Gross Pay
Current
2,450.00
YTD
6,450.00
Current Deductions
SOCIAL SECURITY
MEDICARE
FEDERAL W/H T
MED AID/WKCMP
Pay Period Ending
8/15/2009
Check Number
Federal Tax Code
S00
Reductions Taxable Gross
Taxes
0.00
2450.00
633.78
0.00
6450.00
Amount
Type of Pay
Distribution
-151.90 HOURLY
09-9413
-35.53
-446.35
-3.50
P
Home Department/Unit Number
OPERATING RESOURCES
74-4630 0011
Deductions
3.50
Units
61.25 HRS
Year-To-Date Deductions
SOCIAL SECURITY/MEDICARE
FEDERAL WITHHOLDING TAX
120046
Check Number
P120046
Net Pay
1812.72
GROSS AMOUNT
2,450.00
Amount
493.43
1,114.05
NONNEGOTIABLE AFTER SIX (6) MONTHS
• 6.2% for both employee and employer
(12.4% total)
• salary limit: $106,800
FEDERAL INCOME TAX
UNIVERSITY OF WASHINGTON- EMPLOYEE EARNINGS STATEMENT
Employee I.D. No./Name
877-006-801
STEPHEN R. FALKEN
Gross Pay
Current
2,450.00
YTD
6,450.00
Current Deductions
SOCIAL SECURITY
MEDICARE
FEDERAL W/H T
MED AID/WKCMP
Pay Period Ending
8/15/2009
Check Number
Federal Tax Code
S00
Reductions Taxable Gross
Taxes
0.00
2450.00
633.78
0.00
6450.00
Amount
Type of Pay
Distribution
-151.90 HOURLY
09-9413
-35.53
-446.35
-3.50
Home Department/Unit Number
OPERATING RESOURCES
74-4630 0011
Deductions
3.50
Units
61.25 HRS
Year-To-Date Deductions
SOCIAL SECURITY/MEDICARE
FEDERAL WITHHOLDING TAX
NONNEGOTIABLE AFTER SIX (6) MONTHS
P
120046
Check Number
P120046
Net Pay
1812.72
GROSS AMOUNT
2,450.00
Amount
493.43
1,114.05
EMPLOYEE’S WITHHOLDING
ALLOWANCE CERTIFICATE
ALLOWANCES
INCREASE # of allowances 
LESS money taken out of
paycheck (withheld) 
LOWER refund at end of year