Income — Wages, Interest, etc.

Time Requirement: 30 minutes

Purpose

Review the Income section of the taxpayer’s return on Form 1040. A critical component of completing the taxpayer’s return is distinguishing between taxable and nontaxable income and knowing where to report the different types of income

Objectives

• Compute taxable and nontaxable income
• Distinguish between earned and unearned income
• Report income correctly on Form 1040

Teaching the Lesson

Refer to the Lesson Plan for helpful instructor notes, visual aids, TaxSlayer® demos, and Internet links. Use the following statements to prompt students to share what they know about Income.

• Explain the differences between taxable and nontaxable income.
• Explain earned income vs. unearned income
• What questions can you ask a taxpayer to determine all sources of income.

Refer students who may want to work independently to Publication 4491, Income.

Key References

This lesson refers to the following publications and forms:

• Form 13614-C, Page 2, Part III
• Publication 4012, Income tab
• Publication 17, Part Two, Income

All references to materials can be found by clicking the Job Aids and Media buttons. There are also links to helpful tools that can be found on the irs.gov public portal. For this lesson, students can link to the following sites for additional help:

• Interactive Tax Assistant to determine if you have to file a return
• FAQs - 1099-DIV Dividend Income

TaxSlayer® Demos and Tutorials

It is recommended to go to the Practice Lab and access the latest TaxSlayer tutorial for this lesson. The TaxSlayer tutorials can be found by going to the Practice Lab and clicking on the link for TaxSlayer IRS training.

Publication 4012, Income tab, will include examples of how to enter income data in TaxSlayer.