6.4: Form 1040 - Reporting Taxable Income - C

Financial Algebra Second Edition

Slide 1

6-4: Form 1040—Reporting Taxable Income

The students will be able to:

•Understand the factors that determine whether or not someone has to file a tax return
•Explain what a dependent is and establish if you can be claimed as a dependent by someone else on their tax return

​Learning Goals

Financial Algebra Second Edition

A) To turn in on paper:
Tax Deductions vs. Credits

Reference: Standard Deductions vs. Itemized Deductions

You have all your paperwork and are ready to fill out the 1040. Not so fast! You also have to figure out if you qualify for any tax credits or tax deductions, which can actually lower your overall tax bill! Read the information from this article segment and reference slide to learn more about tax credits and deductions. Then, answer the questions.

1. In your own words, explain how tax deductions differ from tax credits.

2. Would you rather want to take a tax deduction or a tax credit? Why?

3. Why might someone want to itemize their deductions if it requires more work than simply claiming the standard deduction?

Financial Algebra Second Edition

B) To turn in:
What Happens if They Find Mistakes on Your Tax Return?B)

While you probably spent a good amount of time making sure your tax return was error free before submitting it, there’s always a chance that you made a mistake. So what happens if you did? Read this article to find out and answer the questions.

1. How will you know if there was an error on your tax return and the IRS has made a change?

2. What should someone do if they do not agree with the adjustments the IRS made?

Financial Algebra Second Edition

C) To turn in:
Why Do I Owe on My Tax Return?CC

Ways to Make a Tax Payment

So, you filed your tax return and...you owe some taxes. Why is this the case? And how do you make your payments? Watch this video and then go to the IRS website itself to find out. Then, answer the questions.

1. Explain why someone would owe money to the IRS.

2. What are the two primary ways you can pay the taxes you owe?

3. What is one other way you can pay?

4. Jill filed her taxes and found out that she owes an additional $1,500. Unfortunately, she can’t afford to pay that amount immediately. What options does she have? What are the pros and cons of using these options?

Financial Algebra Second Edition

D) To turn in:

What's the IRS Penalty If I Miss the Filing Deadline?
What happens if you don’t file your tax return at all? Or, what if you don’t pay back any taxes that you owe? Read this article to learn about what penalties and fees you may face. Then, answer the questions.

Financial Algebra Second Edition

1. Under which of these circumstances would you incur fees from the IRS?
(Select all that apply)

a. When you owe taxes and filed your tax return 3 days after the filing deadline.

b. When you are owed a tax refund and you file 3 days after the filing deadline.

c. When you owe taxes and fail to pay the amount owed by the tax deadline.

2. Circle or highlight the options that correctly complete this sentence:

​

Failing to file your tax return is more / less severe than failing to pay back any taxes you owe. If you fail to file your tax return, you will be charged 0.5% / 5% per month, whereas if you fail to pay any taxes you owe, you will be charged 0.5% / 5% per month.

3. If you are owed a tax refund, you have 3 years to file your tax return. Do you think it is a good idea to wait so long? Why or why not?

Financial Algebra Second Edition

E) To turn in:
What To Do With Your tax-refund

Now let’s take a look at the alternative outcome you might have after you file your tax return - you got a refund! Read this article to learn some tips on how to best use your refund. Then, answer the questions.

1. Which of the recommendations would you use to maximize your tax refund as a high school student? Explain your reasoning.

2. Now, think about yourself as a 22-year old college graduate. Would you change the way you spend your tax refund? Why or why not?