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What is: Personal Income Tax Return

admin — Mon, 22 Feb 2010 07:15:18 +0000

Throughout the year, a variety of things that affect your income taxes can happen. In the United States, a personal income tax return is a set of forms provided by the Internal Revenue Service (IRS) which most residents are required to complete every year. Most financial transactions and important life events will be entered into your tax return so that you can calculate exactly how much income tax you owe to the federal government.

Typically, you pay some amount of income tax through withholdings (see What is: Withholding) throughout the year, but your withholding amounts are only estimates. After you complete your tax return, you’ll find out how close the total withholding is to your actual tax owed.

What is: Withholding

admin — Wed, 10 Feb 2010 07:22:41 +0000

Typically, each of your paychecks shows deductions for Social Security, Medicare, federal tax, and state tax. These items amount to your withholding–the portion of your pay that is withheld. These amounts are sent by your employer to the Internal Revenue Service (IRS), an agency of the U.S. government.

At the end of the year, you’ll receive a form that shows the total amounts withheld from you throughout the year. The information on this form will help you complete your tax form, which will determine the size of your tax refund or balance due.

Personal Income Tax Calculation

admin — Mon, 01 Jun 2009 17:28:43 +0000

IRS Form 1040 summarizes your tax information for the year—Some numbers come from additional forms called “Schedules”

All Income is everything that you received during the year. Some income, such as tax-free gifts, is excluded, which is why Total Income can be less than All Income.

Losses reduce your Total Income

Business losses (Schedule C)
Capital losses (Schedule D)
Farm losses (Schedule F)

Deductions for AGI reduce your Adjusted Gross Income

Educator expenses
Health savings account deduction (Form 8889)
Moving expenses (Form 3903)
Self-employment taxes (Schedule SE)
Self-employed retirement plans and health insurance
Alimony
IRA (Individual Retirement Account) contributions
Student loan interest
Tuition and fees (Form 8917)

Deductions from AGI reduce your Taxable Income

Standard deduction or itemized deductions (Schedule A):

Medical and dental expenses*
Local taxes and property taxes
Mortgage interest (Form 1098)
Gifts to charities
Casualty and theft losses (Form 4684)
Job expenses (Form 2106)

* If greater than 7.5% of AGI

The above information shows common tax items and is not intended to be a complete reference. Consult with your tax professional for further assistance.

Credit Cards: The Basics

admin — Sun, 31 May 2009 04:31:18 +0000

Captions:
(1) Enter some personal information in an application and send it to the credit card company.

(2) The card issuer will estimate your ability to pay back money, and send you a credit card with a limit that they determine.

(3) You can make purchases until you reach the credit limit.

(4) The card issuer will send a monthly bill that shows how much you spent.

(5) You will have a set number of days (the “grace period”) to make a payment. You will be charged fees if you miss a payment deadline.

(6) A – Pay only a small portion of the balance each month, and interest charges will quickly pile up.
B – Pay the full balance each month, and it’s a free loan.

Personal Income Taxes

admin — Tue, 07 Apr 2009 00:49:22 +0000

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