Current time:0:00Total duration:13:59

Video transcript

Filling out your taxes can be intimidating for anyone and especially if you've never done it before. So what I wanna do in this video is really show you an example of filling out your taxes and hopefully giving you a little bit of context for why the form looks like it does or where you might find the relevant information. And I'm going to start with, or at least in this video, I'm going to use the most simple of the IRS forms, 1040EZ, literally, I guess because it's supposed to be easy. And this isn't going to be for everyone, it tends to not be for people with parents or people with an income over 100,000 or homeowners or people who have I guess more complex either income or they have a lot of deductions that they might wanna itemize but it tends to be a pretty good tax form for folks who are filing their taxes for the first time, might only have one job and have a fairly simple financial picture so let's just go through this and then obviously it might get more complex or it will get more complex as you decide that you can't use this form, that you have to use a more fancy form. So up here, there's just your basic information, so let's see, and I'm just gonna assume that I'm filling this out as a single individual but you could also fill it out as married. But let's say my name, my first name, let's say it's Joe and my last name, I'm Joe Singleguy, Joe Singleguy, I guess it'll be a strange name once I get married but I'll just go with it. My social security number, 123-456-6789, I hope I don't experience any identity theft by giving this away, and let's see, I'm assuming he's single so there's no spouse name over for this line and then the address, so 123 Main Street and I live in Big City, let me write a little bit neater, the IRS needs to be able to read this, Big Big City, California, and my zip code is 12345, which I don't think is an actual zip code in California but I think you get the picture, I'm trying to prevent identity theft here. (chuckles) So let's see what else here, foreign country name, well we're just assuming that he's based, that I'm, I'm Joe Singleguy, I'm based in the US so I wouldn't fill out any of this and then check here if you or your spouse filing jointly want $3 to go to this fund for presidential elections. Checking a box below will not change your tax refund. Let's just say you don't wanna do that, and so let's just get to the meat of the actual form now. So wages, salaries, and tips. This should be shown in box one of your form or forms, W-2. Attach your forms W-2. So we have another video on the W-2 form, this will come from your employer if you have one employer, if you had multiple employers in the previous year, then you will have multiple W-2s and the W-2 should go in the beginning, you should get it at the end or you should get it at the beginning of the new year so if we're filing taxes for 2013, we should be filling out this form some time in early 2014, after we got our W-2 and you usually get your W-2 in January of the new year, so January, probably January of 2014. So when I look at my form and I look at box one, my wages, salaries, and tips, I get 40, I have an even $40,000. Now taxable interest, if the total is over $1500, you cannot use form 1040 EZ. So your taxable interest, this will tend to, you tend to get this information from your banks, they will give you a 1099 interest form, so these are the types of things that you will be getting in the mail after that first year of work, you'll get these in the new year, you should get a W-2, you should get these 1099 forms, and these give you all the information you need to actually fill out these boxes. And so in my 1099 form, I had $57.50 of interest from my savings account. And then in box number three here, unemployment compensation and Alaska Permanent Fund dividends, well I didn't get any unemployment benefits so I'll just leave that blank, add lines one, two, and three, this is your adjusted gross income. Adjusted gross income, and we'll talk a little bit about why they're saying gross income, because we're essentially going to talk about taxable income in a few lines from now, but let's just add these so this plus this is going to be $40,057.50. Is that right? Yeah, that's right. And then if someone can claim you or your spouse if a joint return as a dependent, check the applicable boxes below and enter the amount from the worksheet on back. So we're assuming that I as Joe Singleguy, I live by myself, my parents can't claim me as a dependent anymore, I don't live with them, I'm not dependent on the financial support from them, this is how I'm surviving based on my own work and productivity, so I'm not going to check either of those out. Then they say if no one can claim you or your spouse if a joint return, enter 10,000 as single, 20,000 if married filing jointly. So I'm single so I'm gonna put 10,000 over here. $10,000 and then they say subtract line five from four. If line five is larger than line four, enter zero. This is your taxable income, so this is interesting. I had my gross income, which is what I got from my W-2 plus my interest, so this is my gross income, now they're allowing me to subtract this out so if I subtract $10,000 from that, I get, oh what is this? I have an update available on my computer, let me close that. I get $30,000, 30,057 and 50 cents. 30,057 and 50 cents, now what just happened here, why did they reduce it by $10,000? Well the way our tax code works, we're allowed a certain amount of, they call it a personal exemption so just the fact that you're kind of having to support yourself, it allows you to reduce your gross, your taxable income and there's also something called a standard deduction, the standard deduction is essentially, even if you didn't give to charity and you have all of these other itemized deductions, you can instead pick the standardized deductions if you have kind of a simple situation like Joe Singleguy right over here, and the combination of the personal exemption and the standard deduction for a single individual is $10,000, and so it reduces my taxable income by $10,000 so one way to think about it is this right over here is what I'm going to pay my taxes on so now let's think about, now let's go to the payments part so this is my taxable income, now we have to figure out what I've already paid and then what I owe, and then essentially, before April 15th or I guess right on April 15th, I've gotta pay the difference. So federal income tax withheld from form W-2s, so once again, this is something that you go to your W-2 that you got from your employer and the 1099 and it'll say how much federal tax was withheld so you take the total amount that was withheld from the W-2s and 1099s and you put it here. This is essentially the tax that you already paid during the year and let's say you look it up and it has, I would say it's $6,341.50. Let's just say that's the amount of tax that you already paid, now earned income credit, so this starts to kick in if you make a fairly low income or if you have a lot of dependents and you still have a reasonably low income but for this individual, it's not going to kick in, we'll do future videos on that, so we'll leave that blank, nontaxable combat pay election, we'll assume that that doesn't apply, add lines seven and eight A, these are your total payments and credits so this is essentially how much have I paid in total in taxes so far, 6,341 and 50 cents. Now I have to figure out how much should I have paid. Use the amount on line six above, so this amount right over here, 30,057 and 50 cents to find your tax in the tax table in the instructions. Then enter the tax from the table on this line, so let's see, let me get the tax table from, and you can find this online, it's actually a fairly large document but this right over here is the tax table and they go literally, they give you every, they go by $50 increments but they give every possible taxable income here and so let me just remember what I taxable income was before I take my screen so 30,057, that's my taxable income. If I round it up, it would be 30,058, so I just have to remember that, so 30,058, let's see, let me scroll down a little bit, supposed to be 30,050, so the next increment would be 30,100 so I'm in this zone right here so this is the line that applies to me and if you look at the key up here, so if you look at the key right up here, this is the tax if I'm single, this is the tax if I'm married and so it's 4000 and married filing jointly, so this is Joe Singleguy, single, 4,065 in taxes is what I should have paid, so 4,065, so let me fill that in, so let's see, that's $4,065. And you say if line nine is larger than line 10, which is the case, this is larger than that, this is your refund because I overpaid, this is the amount I should have paid but I paid all of this through my employee withholding and my bank withheld from the interest so I essentially overpaid so I put the difference down here so let me get my calculator out to calculate that difference so let's see, I have 6,341 and 50 cents minus 4,065 and so this is the amount that I overpaid, I overpaid by 2,276.50, 2,276.50 so let me fill that out right over here, so that's 2,276.50, let me scroll down and this is essentially what my refund is going to be, I expect to get this, maybe I could save it and that's probably the most prudent thing to do or buy something nice for myself or maybe a combination of it, and then over here, they're essentially saying, how do you wanna get that refund, so you can go, you can get your information from your bank if you wanna put it into your checking account, this information is actually on your checks, the routing number and the account number and you fill that out, so once again, this is not going to be an accurate routing number. And it's definitely not going to be an accurate account number but just to feel the satisfaction of filling in a fake tax form, I'll do a little bit of it, this probably isn't even, actually it's not gonna have two digit numbers in it so it's gonna have, so I'll just fill out the whole thing, it might not take up all of the space, one, two, zero, three, five. And so, and let's say this is a checking account and once again, this might not be the accurate number of digits, might be different depending on what your check book looks like and then so this is your refund, this is what you're going to get. Now if it was the other way around, if you owed more money than you paid, then you would have to actually write a check and you would do it right over there and then you go down over here, so do you want to allow another person to discuss this return with the IRS so if you do, you click yes, this could be either a family member who's very knowledgeable or it could be your accountant of some kind but if you have not too complicated taxes then you might not need that. And then you sign to kind of say that, hey, this is all real, under penalties of perjury, which you don't wanna, you don't wanna find out what they are, I declare that I have examined this return to the best of my knowledge and belief, it is true, correct, and accurately lists all amounts and sources of income I received during the tax year. Declaration of preparer other than the taxpayer is based on all information which the preparer has any knowledge, so let me sign this, so Joe Singleguy, Joe Singleguy and let's say I've procrastinated, I've waited for the last possible date to do this and let's say these are my taxes for 2013 so I'm gonna do this on 2014, April 15th, and my occupation, I don't know, let's say I'm an engineer, engineer, and my daytime phone number is, once again, I will make this up, 456-7890. And I'm essentially, I'm essentially done. If I had this area right over here, is if you have an accountant, a paid preparer, they would fill that out but this, if I'm just Joe Singleguy with fairly straightforward financials, I just filled out my taxes in about 14 minutes.