Sample Tax Forms

Preparing the various tax forms may look difficult but really is not. If you follow the forms line by line and refer to the instructions when necessary, you should be able to complete the forms easily. On the next few pages are examples of Form W-4, Form 1040EZ, and Schedule C-EZ that you can use as a guide. And don't forget, if you have any questions, you can contact the IRS.

Form W-4

Rachel Smith is 19 years old and a sophomore at City College. Her parents pay most of her college costs, including living expenses, and claim her as a dependent on their tax return. In 2001, Rachel has a job as a cashier at the ABC Department Store.

Rachel estimates that she will earn about $1,220 during the school year and about $3,420 during the summer. Also, she usually earns about $50 a year in interest on checking and savings accounts at a local bank. Her total income will be about $4,690.

On Rachel's first day of work, her boss gives her Form W-4 to fill in. Her completed Form W-4 is shown later.

Rachel begins by reading the information and instructions above the Form W-4 certificate. She reads the information under "Exemption from Withholding" and the statement on line 7 of Form W-4. She had a right to a refund of all federal income tax withheld in 2000 because she had no tax liability. But she expects to have a tax liability for 2001 because her earned income will be more than $4,550, and her parents can claim her as a dependent. Rachel cannot claim exemption from withholding.

Personal allowances worksheet. Because Rachel is not exempt from withholding, she completes the Personal Allowances Worksheet on page 1 of Form W-4.

Line A. Because her parents can claim her as a dependent, Rachel cannot claim an allowance for herself. So she leaves line A blank.

Line B. Because she is single and has only one job, she can enter "1" on line B.

Lines C-G. Rachel leaves lines C and D blank because she has no spouse or dependents. She reads the information under "Head of Household" in the instructions at the top of the form. Rachel realizes that she cannot claim head of household filing status, so she also leaves line E blank. She leaves lines F and G blank because she has no children.

Line H. She adds lines A through G and enters the total of her allowances (1) in the entry space for line H.

Rachel reads the bulleted items under line H and finds that neither the first nor the second items apply to her. Following the instruction for the third bulleted item, she enters the "1" from line H of the worksheet on line 5 of the form.

Form W-4. She fills in the identifying information at the top of the form and checks the "Single" box in item 3. Rachel leaves line 6 blank because she does not want any additional amount (beyond what claiming "1" allowance will provide) withheld from her wages.

Because she cannot claim exemption from withholding, she leaves line 7 blank.

Rachel signs and dates the form at the bottom. Boxes 8, 9, and 10 are left blank. These are for her employer's use, if needed.

Form 1040EZ

Pat Brown is single and has no dependents. She is 22 years old and a full-time student at State University. She has a scholarship that covers her tuition and $500 of her room and board each year. Her parents are able to claim her as a dependent.

In 2000, Pat worked in the community library during the summer. Her Form W-2 (not illustrated) shows she earned $2,250 in wages and had $150 in federal income tax withheld during 2000. She also received a Form 1099-INT showing she had $277 in interest income. She files Form 1040EZ as explained below. Her completed Form 1040EZ is shown later.

Name and Address

Pat picked up a Form 1040EZ instructions booklet at the local post office. She followed the instructions and wrote her name, address, and social security number as reported on her social security card, in the space provided on the top of the Form 1040EZ. When she finished she checked again to make sure everything was written as the instructions requested.

Presidential Election Campaign Fund. Pat wants $3 of her taxes to go to this fund, so she checks the "Yes" box. Checking "Yes" will not change her tax or reduce her refund.

Income

Pat has two items of income that must be combined and the total entered on line 1 of Form 1040EZ. The part of her scholarship that is for room and board ($500) is taxable. She adds this amount to the wages ($2,250) shown in box 1 of her Form W-2. She enters the total (2,750.00) on line 1. In the space to the right of "W-2 form(s)," she writes "SCH $500." On line 2, she enters her interest income of 277.00. She adds her wages, taxable scholarship, and interest together to figure her adjusted gross income of $3,027. She enters 3,027.00 on line 4.

Standard Deduction and Personal Exemption

Because Pat can be claimed as a dependent by her parents, she checks the "Yes" box on line 5. She uses the worksheet on the back of her Form 1040EZ to figure the amount to enter on line 5. The information from her completed worksheet is shown below.

Pat enters 3,000.00 on line 5.

Note. If she could not be claimed as a dependent by her parents or someone else, she would have had a standard deduction amount of $4,400 and a personal exemption of $2,800. In that case, she would have checked the "No" box and entered $7,200 on line 5.

Payments and Tax

Pat subtracts line 5 (3,000.00) from line 4 (3,027.00) and enters the result of 27.00 on line 6. This amount is her taxable income. She will figure her income tax on this amount.

Pat had $150 of federal income tax withheld from her wages by her employer. She found this amount in box 2 of her Form W-2. She enters this amount on line 7 of Form 1040EZ.

Because she is under age 25 and her parents can claim her as a dependent, Pat is not eligible for the earned income credit. She prints "No" in the space to the right of the word "below" on line 8.

If she wanted the IRS to compute her tax for her, she would stop at this point. She would make sure that lines 1 through 8 were completed accurately, then sign and date the return and enter her occupation.

Pat decides to compute her tax by herself. She adds the amounts on lines 7 and 8 and enters her total payments (150.00) on line 9.

She goes to the Tax Table in the instructions and reads down the income column until she finds the line that includes $27, her taxable income shown on line 6 of her Form 1040EZ. She then reads across the line to the tax column for single persons to find her tax ($6). She enters 6.00 on line 10 of her Form 1040EZ.

Refund or Amount You Owe

Pat compares line 9 and line 10. Because line 9 is larger, she subtracts line 10 (6.00) from line 9 (150.00) to arrive at her refund of 144.00. She enters this amount on line 11a. She does not want to have her refund deposited directly into her bank account; therefore she leaves lines 11b, 11c, and 11d blank. She also leaves line 12 blank. She will receive a tax refund of $144.

Note. If her employer had not withheld any federal income tax from her wages, Pat would have owed $6 in income tax. She would have left line 11a blank and entered that amount on line 12. She would then have enclosed in the envelope with her return a check or money order for the full amount of $6 payable to "United States Treasury." She would have written on the front of her check or money order:

• "2000 Form 1040EZ,"
• Her name,
• Her address,
• Her daytime telephone number, and
• Her social security number.

Sign Your Return

Pat checks her return to make sure that she entered the numbers clearly and correctly and that her math is correct.

Pat enters her occupation (student) and signs and dates her return at the bottom of the form. She makes a copy of her filled-in tax return for her records. She attaches a copy of her Form W-2 where indicated on the front of her return. Then she mails her return to the appropriate Internal Revenue Service Center as indicated on the back of the instructions.

Schedule C-EZ

Stephen Burke is a high school student. During the summer of 2000, he mowed lawns for some of his neighbors. He used his father's lawn mower and paid for gas and oil used in his business.

Stephen kept good records that showed he earned $750, including tips, and spent $40 on gas and oil. Because his income minus business expenses is at least $400, he must file Form 1040 and either Schedule C or Schedule C-EZ, even if this was his only income. Because his net earnings from self-employment are at least $400, Stephen must also complete Schedule SE to compute his self-employment tax. Form 1040 and Schedule SE are not shown here. Stephen chooses to file Schedule C-EZ. He enters his name and social security number at the top of the schedule. He then fills in the required information in Parts I and II. (Stephen's filled-in Schedule C-EZ is shown at the end of this publication.)

Part II, line 1. This is where income is reported. All the money he received ($750) is shown on line 1.

Part II, line 2. This is where expenses are reported. He lists the $40 for gas and oil on line 2.

Part II, line 3. This shows the net profit from the business that is subject to tax. Stephen must include $710 on Form 1040, line 12.

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