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Understanding Taxes Worksheet

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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 correlating questions in 50- to 150-word responses.

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? If the student was single with no dependents than a 1040EZ tax form would be the easiest choice for a simple return. Enter a 2nd college student who is married with children then the tax form for him would have to be the 1040A form since it contains a simpler form with the necessary entries needed for all dependents.

2. If a person is single and head of household, why would he or she be able to file “head of household”? An individual of any marital status could file head of household if they were not considered married by the last day of the tax year that would mean you were either single, divorced, or legally separated, while paying more than half the cost of keeping up a home for the year in question a 2nd qualifying person would also have to live with you in that home for more than half the year. Are there any benefits from filing as head of household, rather than single? The benefits of filing as head of household rather than single are you will receive a better tax return financially than you would as a single tax payer.

3. Define capital gains. What impact can this have on a refund or payment of taxes? Capital gains are any and all profits made after selling capital assets such as property, stocks, or bonds at a price higher than the original purchase price.…...

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