How to Teach Tax Preparation
Teaching tax preparation can be daunting, even for the experts. Where do you start when trying to teach our tax code to the uneducated? The rules and exceptions can be overwhelming for those with no tax background, and even the experts admit that there are many contradictions.
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Instructions
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Have your students begin by simply memorizing the basic income tax formula and its major components. The formula itself is fairly simple, and each section of the formula has a set of basic components, plus a host of smaller ones. But you should teach the formula first so that students will know where the rest of the information they learn is used on the 1040.
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Go over the major components of the tax formula, one section of the time. Teach your students about the various types of income, and which of those types of income are taxable. List the major deductions both for and from Adjusted Gross Income, as well as the major tax credits listed on the 1040.
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Focus on specialized issues, such as self-employment and military personnel. Go over these issues in detail, explaining the overall situation conceptually. Retirement income is another subject that you should cover thoroughly as a separate topic.
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Have your students start preparing returns on paper, as this will help them translate the concepts taught into hard numbers that are reported. Start with simple returns and move on to more complex topics, such as self-employment.
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Teach your students how to prepare their home state returns after they have mastered the federal tax rules. They should become reasonably familiar with the specific deductions and credits that are available in their state, along with those of any neighboring states.
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Introduce your students to at least one of the computer programs available for tax preparers. Teach them the rules of electronic filing and payments as well as record-keeping and signatures. Direct your students to the Enrolled Agent section of the IRS website for further study.
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