Classtoomtools.com Lesson - Tax Returns Made EZ

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Tax Returns Made EZ

Benjamin Franklin once wrote, "In this world nothing can be said to be certain, except death and taxes." Use this activity to introduce your students to one way citizens in the U.S. experience the latter. It can help develop basic arithmetic skills, and the ability to read and follow detailed instructions. The IRS claims that the 1040EZ was developed for easy use by those with no more than a middle school education.

Before you start, you'll need copies of the following for each student.

sample W2 form
(After viewing or printing the form from either of the links below, close the standalone window that opens for it. You should then return to this one.)

here is one in HTML format

here is one in Adobe Acrobat PDF format

sample filled in Form 1040EZ (in PDF format)
(After viewing or printing this form, close the standalone window that opens for it. You should then return to this one.)

Form 1040EZ instruction booklet

available at libraries and post offices during tax season (mid-January through mid-April)

Internal Revenue Service's PDF version

Internal Revenue Service's HTML version

blank Form 1040EZ

available at libraries and post offices during tax season (mid-January through mid-April)

Internal Revenue Service's PDF version

individualized W2 form
If you want to prepare an individualized W2 form for each of your students, you can use the pair of Microsoft Office files below. Tax_W2.DOC is a master merge document that uses the data from Tax_W2.XLS to fill-in its merge fields. To make it work for you, you'll need to edit the names in the XLS file to those of your students. Additionally, you may need to add rows for additional students. To do so, turn off protection for the worksheet, insert rows above the existing last row, then copy one of the existing rows to the blank rows you want to fill. You'll also need to put your class name and school address on the W2 form.

You may also want to edit the gross income amounts in the data file. As you do, you'll see the withholding amounts change. FIT (federal income tax withheld) is calculated as 7% of gross income. FICA (social security and Medicare tax withheld) is 7.65% of gross income. SIT (state income tax withheld) is 4% of gross income. SDI (State disability insurance withheld) is 0.6% of gross income. NET (net income) is gross income less the amounts withheld. If you live in a state that does not collect income tax, you can set the SIT rate to 0 on the TaxRates tab of the Tax_W2.XLS file. As you edit gross income amounts, keep in mind that Form 1040EZ is limited to those with taxable incomes of less than $100,000. (For a complete list of requirements that must be met by those eligible to file a 1040EZ, click here.) If you choose to give everybody in the class the same amounts on their W2 forms, enter the same gross income for each student.

To download one of the files below, right click on its link then choose Save Target As and specify the location to which you want it saved. You may also click on the file's link. If you have Quick View+ installed on your computer, the file should open in a separate window (except for Tax_Ans.XLS which cannot be opened with Quick View+ - trying to do so will display an error message - if you see it, choose the Save option it gives you). Save the file to a folder on your hard drive from that window, then close that window to return to this one. If you do not have this viewing program installed, a small window should open. One of the options presented should be to save the file. Click on that option. You should then be prompted to specify where on your hard drive you want to save the file. Put it in the folder where you'll be able to find it when you want to use it. Once the file has completed downloading, the small window will close on its own.

Tax_W2.DOC

Tax_W2.XLS

Tax_Ans.XLS - an Excel spreadsheet that you can use to calculate a 1040EZ answer sheet for your entire class.

It is possible that the first time you open Tax_W2.DOC after downloading it, you'll be prompted to search for the data source. If so, look for Excel files in the directory where you saved the download. After selecting the file (Tax_W2.XLS), click on Entire Spreadsheet when prompted to do so.

If you cannot use Microsoft Office files, e-mail me and tell me the type of merge and data files you need. If possible I will convert my Office files and e-mail the new files back to you. If I cannot convert my files to a format that will work for you, you can use the merge feature of your word processor to design a form that will produce W2s for your students.

student assignment sheet
(After viewing or printing the form from either of the links below, close the standalone window that opens for it. You should then return to this one.)

here is one in HTML format

here is one in Adobe Acrobat PDF format

Warming up
Conducting the activity
For ideas that can be developed to extend this activity, look at the following web sites.

The IRS site designed for students and teachers.

The IRS site for ordinary taxpayers.

The Tax Foundation tracks the percentage of taxes paid by U.S. citizens. Each year they calculate Tax Freedom Day (the day you would begin earning spendable money if you paid all taxes up front). The Center for Budget and Policy Priorities criticizes their results as misleading in this report.

California residents must file income tax returns too. To see what the California EZ forms and instructions look like, follow this link.

If you want to give your students a look at how some of the money generated by the Federal Government is used and reported, explore Numbers at War.

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