FP 120 Week 5 Understanding Taxes Worksheet


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FP 120 Week 5 Understanding Taxes Worksheet

Resource: Taxes
Complete the Understanding Taxes Worksheet. (Note: you will not be using your personal tax information.)
Submit the completed Understanding Taxes Worksheet as a Microsoft® Word® attachment to the Assignment Files tab.

Understanding Taxes Worksheet

Resources: The United States Internal Revenue Service at www.IRS.gov

Directions: Use the links provided for each tax form to answer the correlating questions. Each response should be 50- to 150-words.

Understanding the 1040 Form

Visit 1040A Form at http://www.irs.gov/pub/irs-pdf/f1040a.pdf

1. Compare and contrast the 1040, 1040A, and 1040EZ form. Which form would a single student use? If the student was married with children, which form would most likely be used?

2. If a person is single and head of household, why would he or she be able to file “head of household”? Are there any benefits to filing as head of household, rather than single?

3. Define capital gains. What impact can this have on a refund or payment of taxes?

4. What is adjusted gross income? On which line of the tax form is total income located?

5. What lines would student loan interest deductions and tuition and fees be located on the 1040A form? What form is used to document a student’s tution and fees?

6. What are tax credit and tax deductions? Explain each.

7. When would a person use a third party designee?

Visit W-2 Wage and Tax Form at http://www.irs.gov/pub/irs-pdf/fw2.pdf.

8. What is primary purpose of the W-2 Wage and Tax Form?

9. When does a taxpayer receive the W-2? Who will provide this form to the taxpayer?

10. What items on the W-2 make up Federal Insurance Contributions Act or FICA?

11. What form should accompany the W-2 for Child and Dependent Care Expense?

12. What is the date that taxes are due? If you need an extension what form would you use? How long is the extension? Are there any penalties for requesting an extension?
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