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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 want to 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 in 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's not going to it tend to not be for people with parents or people with an income over a hundred thousand dollars or homeowners or people who have I guess complex more complex either income or they have a lot of deductions that they might want to 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 to have a fairly I haven't I have a fairly simple financial picture so let's just go through this and then obviously it might get more complex or will get more complex as you as you decide that you don't you can't use this form that you have to use a more fancy form so up here is just the basic information so let's see my friend I'm just going to 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's single guy Joe single guy I guess it'll be a strange name once I get married but I'll just go with it my social security number one two three four five six seven eight nine 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 one two three Main Street and I live in 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 one two three four five 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 okay so let's see what else he a foreign country name well we're just assuming that he's based in that I'm based I'm Joe single guy I'm based in the US so I wouldn't fill out any of this and then check here if you over spout it check here if you or your spouse if filing jointly want three dollars to go to this fund for presidential elections checking a box below will not change your tax refund well let's just say you don't want to do that and so let's just get get to the meat of the actual forum now so wages salaries and tips this should be shown in box one of your forms of your form or forms w2 attached attach your forms w2 so we've up 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 that w-2 should go into because you should get it at the end of or you should get it in the beginning of the new year so if we're if we're filing taxes for 2013 we should be filling out this form sometime 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 1 my wages salaries and tips I get 40 I have an even 40 thousand dollars now taxable interest if the total is over 1500 you cannot use form 1040ez so your taxable interest this will tend to you tend to get this information from your banks they will give you a 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 this 1099 forms and these give you all the information you need to actually fill out these boxes and so in my 1099 for I had $57.50 of interest from my savings account and then box number three year 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 it just did gross income and we'll talk a little bit about what 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 $40,000 $40,000 and fifty fifty cents 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 good we're assuming that I is Joe single guy I live by myself my parents can't claim me as a dependent more I don't live with them I'm not dependent on the financial support from them this is well I'm 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 the joint return enter ten thousand a single twenty thousand if if married filing jointly so I'm single so I'm going to put ten thousand over here ten thousand ten thousand dollars 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 w2 plus my interest so this is my gross income not allowing me to subtract this out so if I subtract ten thousand dollars from that I get a what is this have an update available on my computer let me close that I get thirty thousand dollars thirty thousand seven and fifty cents thirty fifty seven and fifty cents now what just happened here why did they reduce it by ten thousand dollars well the way our tax code works were 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 growth your 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 single guy right over here and the combination of the personal exemption and the standardized deduct the standard deduction for a single individual is ten thousand dollars and so it reduces my taxable income by ten thousand dollars 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 let's go to the payments part so this is this is my taxable income now we have to figure out what I've already paid and then what I owe and then essentially at before April 15th or I guess right on April 15 I've got to pay the difference so federal income tax withheld from form w-2s so once again this is something that you go you go to your w-2 you got from your employer and the 1099 it'll say how much federal tax was withheld so you take the total amount that was withheld from the w-2s and 1099s is essentially the tax that you already paid during the year and since let's say you look it up and it has let's say it's six thousand three hundred three hundred and forty-one dollars and fifty cents 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 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 a future videos on that so we'll leave that blank non-taxable 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 essentially how much have I paid in total in taxes so far six thousand three hundred and forty-one and fifty cents now I have to figure out how much should I have paid use the amount on line six above so this this amount over here thirty thousand fifty seven and fifty cents to find your tax in the tax table in the instructions then enter the tax on 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 write this right over here is a tax table and they go literally they give you every they go by fifty dollar increments but they give every possible taxable income here and so let me just remember what my taxable income was before I take my screen so thirty thousand fifty-seven that's my taxable income if I round it up it would be thirty seven thirty thousand fifty eight thirty thousand fifty so I just have to remember that so thirty thousand fifty-eight let's see let me scroll down a little bit so see thirty thousand fifty so the next increment the next increment will be thirty thousand one hundred 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 it appeared this is this is the tax if I'm single this is the tax if I'm married and so it's four thousand and married filing jointly so this is Joe single guys single 4065 in taxes is what I should have paid so four thousand sixty five so let me fill that in so it's four thousand sixty five dollars and they say if not line if line nine is larger than line ten which is the case this is larger than that this is your refund because I overpay this is not 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 down here so let me get my calculator out to calculate that difference let's see I have six thousand three hundred and forty one and fifty cents - four thousand sixty five and so this is the amount that I overpaid I overpaid by two thousand two hundred seventy six fifty two thousand two hundred and seventy six fifty so let me fill that out right of here so that's two thousand two thousand two hundred seventy six fifty let me scroll down and this is essentially what my refund is going to be I can you know like I get I expect to get this maybe I could save it that's probably the most prudent thing to do or buy something nice for myself for maybe a combination of it and then over here they're essentially saying well how do how do you want to get that refund so you can go you can get your you can get your information from your bank if you want to put it to 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 I'll do a little bit of it this is probably isn't even actually it's probably not next I can have two digit numbers in it so you can't 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 checkbook 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 out 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 and 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 want to you don't want to 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 taxpayers based on all information which the preparer has any knowledge so let me sign this so Joe single guy Joe single guy and let's say I procrastinated I waited for the last possible eight to do this and let's say this is my these are my taxes for 2013 so I'm going to 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 four or five six seven eight nine zero and I'm essentially I'm essentially done if I have this area right over here is if you have an accountant - paid preparer they would fill that out but business if I'm just Joe single guy with fairly straightforward financials I just filled out my taxes in about 14 minutes
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