Unit 3 – State and Federal TaxesOCS FINANCIAL MANAGEMENT - NCVPS

Unit 3 – State and Federal Taxes Is FULL of Great Information!

• Why is it important that people pay their taxes?• What Agencies collect taxes?• What is the difference between Earned and Unearned Income?• What is a form W-4 and what is it used for?• What is a Dependent?• What is a form W-2 and what is it used for?• What form can be used by many taxpayers to file their Federal Income

Tax?• What form is used to file a NC State Income Tax return?• What is the Due Date to file Income Tax returns each year and how do I

get help filing my return?

What is the Due Date to file Income Tax returns each year and how do I get help filing my return?

April 15thApril 15th is the due date for filing both the state and federal income

tax return for every taxpayer. If there is some reason the return cannot be filed on time, an EXTENSION can be applied for. But the

Extension must be filed by April 15th.Tax Preparation AssistanceThe IRS has a list of tax preparation assistance programs that people can access. They also provide a free electronic filing (e-filing) program for certain individuals who have income less than $62,000.

Electronic Filing a.k.a e-filing

Why is it important that people pay their taxes?Federal,

State, and Local tax funds are used to pay for many programs.

What Agencies collect taxes?

Federal Income Tax (paid to the United States

Government) is collected by the Internal Revenue Service

(IRS).

Image available for reuse through Creative Commons, CCO Public Domain

NC State Income Tax is collected by the North

Carolina Department of Revenue (NCDOR).

Public Domain Image, NC Department of Revenue

Local Counties/Cities collect Sales Tax, Hotel Taxes, Gas

Taxes, and Real Estate Taxes. Each County/City has their

own department that is responsible for this collection.

What is the difference between Earned and Unearned Income?

Earned Income is money that a taxpayer EARNS at

their job.

Licensed for reuse – Creative Commons

Unearned Income is money that a taxpayer receives

from other sources such as: Social Security Benefits,

Disability Insurance Reimbursements, Child

Support, and others.

DonkeyHotey, Social Security Card Illustration, licensed CCO Attribution. International Symbol of Access, Public Domain. www.pixabay.com, licensed CCO, Public Domain

What is a W-4 form?

This form is completed by an employee.

It shows the allowances claimed by the employee.

The employer will use this to determine how much federal and state tax is deducted from each pay check.

What is a Dependent?

In tax terminology – A Dependent is someone that can be claimed on another person’s tax return. In most cases, this is a child of a parent. But sometimes older parents can be claimed on their children’s tax return as well. The dependent has over 50% of their expenses paid for by the claiming person.

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What is a form W-2 and what is it used for?

Image from W2 form on the www.irs.gov site, Public Domain

A W-2 Wage and Tax Statement is provided by the Employer to the Employee. It is an official statement of the amount that Employee earned the previous year.

It lists the amount earned and the state and federal income tax that was withheld from all paychecks in the previous year.

The employee uses this information to complete their Income Tax Returns.

Finding Information on a W-2 Form

What form can be used by many taxpayers to file their Federal Income Tax?

Single Taxpayers with no dependents who earn less than $100,000 in a year can use the 1040EZ form.

EZ stands for “Easy”.

It is a less complicated version of the 1040 form.

Images taken from forms available in the Public Domain on www.irs.gov

What form is used to file a NC State Income Tax return?

Image taken from form available online through NC DOR, http://www.dor.state.nc.us/downloads/fillin/D400_webfill.pdf

NC State Income Tax returns are completed on the form D-400.

There is no “EZ” version of this state form.

Information from your 1040 EZ will be used to complete the D-400.