Understanding Taxes Worksheet

856 Words Sep 3rd, 2015 4 Pages
University of Phoenix Material

Understanding Taxes Worksheet

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

Directions Use the links provided for each tax form to answer the corresponding questions in 50- to 150-word responses.

Understanding the 1040 Form

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

1. Compare and contrast the 1040, 1040A, and 1040EZ forms. Which form would a single student use? If the student was married with children which form would most likely be used?
The single student could use the 1040EZ form. That form is meant for someone who has an uncomplicated tax return to file. The student who is married should use the 1040A form because they do not
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5. On what lines are student loan interest deductions and tuition and fees located on the 1040A form? What form is used to help with a student’s tuition and fees?

Form 8917 is the form used to help with a student’s tuition and fees. This form is attached to form 1040 or 1040A. On form 1040, it is located on line 22. On form 1040A it is located on line 15.

6. What is a tax credit and tax deduction? Explain.

Tax deductions reduce taxable income; their value thus depends on the taxpayer’s marginal tax rate, which rises with income. Tax credits directly reduce a person’s tax liability and hence have the same value for all taxpayers with tax liability at least equal to the credit. In addition, some credits are refundable; they are not limited by the taxpayer’s tax liability.

7. When would a person use third party designees?

Someone might do that if they are handicapped, or if they don't understand enough about their return and wouldn't feel comfortable talking to the IRS, etc. or want their son/daughter/parent/attorney/friend/whatever to be able to discuss it with the IRS, or want their accountant to handle all communications for them, etc.

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

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

The W-2

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