Effective Financial Planning and Tax Strategies for Individuals
Learn about various types of taxes, income tax obligations, independent contractor wages, and tax refunds from an experienced CPA. Gain insights on managing your finances efficiently and understanding tax liabilities.
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Presentation Transcript
FINANCIAL PLANNING & BUDGETING (TAXES) PRESENTED BY JANICE KLOSTERMEIER, CPA, MHA, LFACHE
PRESENTER BACKGROUND Janice Klostermeier, Senior Vice President, Chief Financial Officer CPA licensed in Texas, New York, New Jersey and California BBA Accounting University of Texas at Arlington Master of Health Care Administration Southwest University Lifetime Fellow of the American College of Healthcare Executives Started as a staff auditor, age 25 and became CFO at age 29
VARIOUS TYPES OF TAXES Definition of Taxes: A compulsory contribution to the federal government, state government or local government levied on workers income and business profits ONLY TWO THINGS ARE CERTAIN: DEATH AND TAXES!!
INCOME TAX Whether you know it or not, you sign an agreement to pay your taxes on your income by completing what is known as a Form W4 At the end of the year, a Form W2 is sent to your home or available online from your employer stating what was withheld from your pay check, according to your instructions on the Form W4. Additionally, the form W2 is sent to the IRS to let them know what you agreed to and subsequently paid with regard to income tax withholding.
INDEPENDENT CONTRACTOR WAGES FORM 1099 What if you work for yourself? Do the people that you perform a service for issue a Form W-2? NO A Form 1099 is issued to tell you, that this was the amount of money various customers paid you for your services. Are taxes withheld on a Form 1099? NO This is where you report your income on your tax form at the end of the year and figure what you owe the government, state or local governments.
WHAT ABOUT MY TAX REFUND?? WILL I HAVE TO PAY AT THE END OF THE YEAR? This is where many people get confused. The Tax Form 1040 is what is completed at year end to RECONCILE taxes that you have paid in during the year, either through your employer withholding or quarterly tax estimated payments. A tax liability is clearly figured on the Form 1040 where is says This is your tax Owed On the same form, there is a reconciliation showing This is your tax paid The difference is a tax owed or a tax overpayment, which results in a refund.
FORM 1040 TAX FORM Information required: Name, Social Security number Filing Status (Married, filing jointly, Married, filing separately, Single, Head of Household) Wages Earned IRA s that are rolled over or distributions received OTHER INFORMATION THAT MAY OR MAY NOT BE REQUIRED Schedule D for Capital Gains or Losses Schedule C for a self owned business Schedule E for Rental Properties
TAX BRACKETS A RANGE OF INCOMES TAXED AT GIVEN RATES WHICH TYPICALLY DIFFER DEPENDING ON FILING STATUS Federal Tax Table 2023 (Married Filing Jointly) 0 to $22,000 $22,000 - $89,450 $89,450- $190,750 $190,750 - $364,200 $364,200 - $462,500 $462,500 - $693,750 $693,750 and Over 10% 12% 22% 24% 32% 35% 37%
WHAT IF I MAKE MISTAKES OR DONT FILE IRS is pretty good to work with if you have good intent to make up for not filing Audits can be fairly easy or very painful Penalties can be assessed for not paying taxes or not paying enough taxes The courts can send you to jail!! (Think Al Capone)
WHAT DO OUR FEDERAL TAXES PAY FOR? Three of the biggest categories of expenditures are: Major health programs, such as Medicare, Medicaid Social Security Defense and Homeland Security
WHAT DO MY STATE TAXES PAY FOR? Some items that state and local taxes are used for: Schools Health Care Services General Administration (Government salaries and services) Police Departments Housing for Low income families
CONCLUSION Taxes are NOT scary if you follow the rules If we didn t pay taxes, we wouldn t have the healthcare services, roads and infrastructure, etc. that we enjoy today here in America The IRS, in most cases, is a good resource when you get confused on your taxes, however, it falls on you to be responsible and make a good faith effort to file your own taxes When in doubt, get help.
