Chapter+4+-+Federal+Income+Taxes+2017 (1) - Federal Income Taxes Chapter 4 Why Do We Pay Income Taxes Help fund national state local efforts Cost of

Chapter+4+-+Federal+Income+Taxes+2017 (1) - Federal Income...

This preview shows page 1 - 9 out of 26 pages.

Federal Income TaxesChapter 4
Background image
Help fund national, state, local effortsCost of running the governmentsRoads, bridges, schools, libraries, etc.National defense – armed forcesPolice/fire protectionGovernment programs Welfare, farm programs, special interest, etc.Your goal should be to MAXIMIZE your after-tax incomeWhy Do We Pay Income Taxes?
Background image
US uses a progressive tax systemYour tax rate (%) increases as your income increasesHigh income households pay a higher percentageEveryone starts out paying the same rateBill Gates pays the same rate as you on the first portion of his incomeMarginal tax rate = the taxes owed on the next dollar you earnAverage tax rate = total taxes / taxable incomeMarginal vs Average Tax Rates
Background image
Gross income minus:Federal income taxes withheldState income taxes withheldFICA (Social Security & Medicare) -- 7.65%Filling out a W-4 formThe more exemptions you list, the less income tax they withholdFill out when you start a jobCan make changes laterTake-Home Pay
Background image
You can easily do your own taxesGet the instruction bookREAD the instructionsUse for specific questionsSome tax software is okayBut I would compare to the “by-hand” resultsAl’s Tax Tips
Background image
Round off to the nearest $1Document your numbersCheck your mathWhen in doubt, read the instructions!Keep copies of your calculationsAl’s Tax Tips
Background image
Determine if you have to fileSingle, not a dependentGross income > ~$10,350As a dependent Unearned income > $1,050 or earned income > $6,300Determine which form to use1040EZ1040A1040General Info
Background image
Look at the IRS Form 1040Address & personal infoFiling statusExemptionsIncome
Background image
Image of page 9

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture