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Grade 9-12
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Lesson

Preparing Your Form 1040

Time: 45 mins,
Updated: May 6 2019,

Objective

Students will be able to:

  • Explain the purpose of IRS Forms W2 and 1040.
  • Use the information in a W2 to complete a 1040 and calculate personal income taxes.

In this personal finance lesson, students will use an IRS Form 1040 to calculate personal income tax.

Procedure

Warm-up

Project the PowerPoint Slides. Tell students that today’s lesson is about personal income tax. Go to slide 2 and read the following statistics:

  • The U.S. tax code contains more than 3.7 million words and is more than 70,000 pages in length.
  • Americans spend 7.6 billion hours every year preparing taxes – an average of about 25 hours per person.
  • In addition, U.S. taxpayers spend over $27 billion every year on tax preparation services – an average of about $89 per person.
  • The Internal Revenue Service has a budget over $11 million and employs about 80,000 people.
  • The word “tax” means “I estimate” in Latin.
  • Albert Einstein once said, “The hardest thing in the world to understand is income tax.”

Ask students how these perceptions may affect people’s understanding of personal income tax or their willingness to pay.  Tell them today’s lesson is designed to help them learn how to complete a Form 1040 which is an IRS form used to file their personal income taxes. Note: As of 2018 tax year, Form 1040Z is no longer available; it has been combined into the new Form 1040.

Modeling

Proceed through slides 3-11, which give the fundamentals of personal income tax.  Refer to the Notes section of each slide for guidance on what to discuss on each slide. On slide 10, for a more interactive experience, open Tutorial for Form 1040 and click on the highlighted areas to explain the different parts of the form in detail.

Group Activity

Show slide 12.  Put students in groups of 2 or 3.  Distribute copies of the completed Billie Does W2 Form and the Sample 1040 Form.  Have student use information from the W2 to fill out the 1040 for Billie Does.  Review the additional information provided on the slide about Billie Does. Provide How to Read a W2 Form by H&R Block to students as a reference. Tax tables for this activity are found on pages 67-78 of this year’s IRS 1040 Instructions. Give students access to the instructions via Internet access or provide students a copy to find the correct taxable income and tax liability. Review the form as a class using the provided in the Sample 1040 Form Answer Key.

Individual Activity

Show slide 13. Tell students to write down four things they need to do or remember when filing their personal income taxes.  Have students share answers with the class.  Answers will vary, but should include some of the following:

  • Check their W2 to ensure their personal information is correct.
  • Be sure they get a W2 from their employer.  Keep the W2 handy to prepare their taxes.
  • The W2 shows how much federal income tax they paid during the tax year.
  • Be sure to file the 1040 on or before April 15.
  • Taxes can be paid several ways:  direct payments, credit/debit cards, etc.
  • If they overpay during the year, they can get a refund in April.

Assessment

Play the Kahoot! Game with your class. Divide the students into teams or play using 1-1 devices.

Extension

Activity 1

Assign students (or groups of students) one of the following topics:  Earned Income Credit, Determining If Someone is a Dependent, Homeowner Mortgage Payments, or one of the new Schedules accompanying the new 1040.  Have them prepare a tutorial or handout explaining the topic or how to complete the appropriate IRS forms.