is the introduction section, and I am Lisa Cole, and I will be your instructor over the

next 14 programs. We have 15 programs total, including this one. Today what I would like

to do is do an introduction, kind of introduce myself, go over the syllabus and what texts

we're going to be using, kind of the format of how the class will run, and then we're

going to get a little bit in Chapter 1. So I do want to cover some of that today.

At this point, you should have received a syllabus from me. If you have not, it's in

the mail, it's on the way. Send me an e-mail and let me know. On the syllabus, it will

have my e-mail, my telephone number, my office, and also my particular office hours for whatever

semester you're taking the class. The text that we're going to be using is the Income

Tax Fundamentals, so you should make sure you have the 2009 edition. If you're taking

this in the spring of '09, or also if you're taking it in the fall of '09, we'll be using

the 2009 edition, so make sure you have the correct textbook.

Let's just kind of go over a little bit of the syllabus and what's on the syllabus. You'll

have some course objectives. This is a Basic Income Tax class. And on campus I teach a

federal income tax class in which we cover more material, so this is a one-credit Basic

Income Tax class. So we're going to be covering the basics. My goal is that when you complete

this class, you should be able to do a basic tax return, and we'll go over what that means.

Basic versus one that's a little bit more complicated.

So we want to make sure you understand the individual tax model. We want to make sure

you understand what is gross income and what deductions that you can take from gross income,

and then we're going to look at how to calculate tax, how do we get to our tax.

So we're going to look at the tax formula, we're going to look at tax tables, who can

I claim on my tax return, exemptions. We're going to look at our Schedule A deductions,

you know, can I take my interest on my home. So we'll look at all those type of items,

what's included in gross income, do I have to include babysitting money if I babysit

for someone. So we're going to look at all those little details, what's included in our

gross income and then what can I take as a deduction. If I have to go on a trip or do

something for my job as an employee, can I take that as a deduction?

So we're going to be looking at those items and then, finally, how do I calculate tax,

what tax credits, and then how do I pay tax, you know, how do I make my payment. So we'll

be looking at those items. Also in your syllabus you should have the course requirements. You

will have three multiple choice exams that should be in your packet that you received

with my syllabus. You will also have to do a final tax return. That information is also

in the packet. And then a couple of homework assignments, which will consist of multiple

choice questions at the end of the chapter, which should also be in your packet. So your

packet is full of information. It's full of the syllabus, it's full of the outlines. As

I lecture and go over materials, I'll be filling out chapter outlines. You should have that.

It should be full of PowerPoints, the PowerPoints that I use from time to time, that's in your

packet. And then also your exams are in your packet, along with your schedule of the programs

that we'll be covering. So the withdrawal policy is in there, and then as I said before,

the schedule that we'll be covering over the next couple of programs is also in there,

okay. Make sure that if, as we go through, if you

have questions or concerns or issues, that you send me an e-mail immediately so that

I can address them. You also will have due dates. You should have due dates on your schedules

of when the first test is due, when do I need to turn in Chapter 1 multiple choice questions,

all that's in your packet and part of your syllabus. So make sure that you just take

some time and go through that information so that you'll understand what's due and when

it's due, okay. I wanted to, like I said, introduce myself.

I'm Lisa Cole. This is my seventh year at Johnson County Community College teaching

full-time. Prior to teaching here full-time, I've taught at Park University prior to this.

Also I was the ticket operations accountant for the Kansas City Royals. I also worked

for the Internal Revenue Service as an auditor, and I also worked for Arthur Andersen, when

there was an Arthur Andersen, in the tax division. So I've had a number of years of teaching

experience, along with a number of years of tax experience and other accounting experience,

so just to give you a little background on my history, okay.

Also with your textbook you should receive inside the inside cover is a disc for Tax

Cut. Tax Cut is H&R Block's tax preparation software. So that comes with the book, which

is a great asset because you can load it on your computer. It also comes with a state

return. We do not have time in this class to go over the details of how to work through

that software, but that software is for you to keep, and you are welcome when it's time

to do your final tax return, you're welcome to do it using that software. So it is definitely

a great asset, and so make sure you load that and begin to explore it. You learn to use

it by just exploring it. It doesn't come with any specific instructions. You can get some

instructions online. But just spend some time working through the forms and going through

the process, okay. What we will cover in class is the preparation

of the 2008 tax return. So everything that we cover is going to be related to your 2008

tax return, so everything that happened last year financially.

Okay. So that's all the introduction I have. I believe I covered the syllabus. You will

be submitting your work to me via e-mail. You can mail it or you can bring it by my

office, so you understand how to turn in assignments and when they're due. You know what textbook

you should have, and at that point, I think we've covered everything regarding the introduction.

So what I want to do is just get started and cover the first couple of pages of Chapter

1. So if you have your book, and you should, let's begin to look at Chapter 1. Chapter

1 deals with just the introduction and the individual income tax return, which is our

main focus, is we're going to be looking at the individual income tax return in this class.

Okay. It starts off talking about the history and the purpose or the objectives of the tax

system. The 16th Amendment of the Constitution that was signed or authorized on March 1st

of 1913, they authorized the tax system, the income tax, the ability to prepare a tax return

in the United States to collect tax. So it was 1913. So it's been a long time that we've

been -- we've had a tax system. Most believe it is just to pay for the benefits of the

government, but it's not. It's not just to raise revenue for government; it's also for

social and economic policies. Social meaning, for instance, a couple examples

that they give you, and they give these to you on Page 1-2 in your book is the social

part is that they give you a deduction for making contributions. So if I make contributions

to a charitable organization, I can get a deduction. So they are trying to encourage

you to contribute so you can get a deduction. Also, there's an earned income credit, which

we'll briefly talk about, to where low income, people within certain ranges of income can

get an additional credit, which is called the earned income credit, and it helps increase

their refund. Child and dependent care credit; if I pay for child care, then I can get a

credit for my child care, and so, therefore, encouraging people to pay for child care.

So those are considered social reasons or social policies. The other could be economic

policies. For instance, if I own a business, I can depreciate certain assets in my business

and get a deduction for that. If I hire certain classes or certain type of workers, I can

get a credit perhaps for a workforce development credit. There's different types of credit

and things that their motive is to spur the economy. When -- if you look on Page 1-2 under

the New Law Alert, they talk about what happened when we had Katrina. That disaster caused

Congress to come up with a lot of credits and deductions for economic purposes. You

could get a credit to help the rebuilding process, a credit in the area of helping to

start new businesses or to encourage -- to develop the workforce down there. So a lot

of times when there are issues or economic issues, then it encourages different tax credits.

So our tax law is not just to raise revenue. It also is there to encourage social and economic

policies. Okay. So let's look at Section 1.2, reporting

and your taxable entities, okay. We have five taxable entities, or entities that report

directly to the Internal Revenue Service. We have individuals, and that's us, and we're

going to be looking at the 1040s as we do that, and that's our main focus. But we also

have our corporations. Our corporations file tax returns, and they are 1120s. And they

file tax returns with the Internal Revenue Service and they pay tax. So they pay tax

as an entity, the corporations do. Partnerships file a return, they file a 1065, but they

don't pay tax to the IRS. Partnerships file an information return, and then the partners

take their share of their income and put it on their tax return and then, therefore, they,

the partners, pay tax. So the partnership itself is not a tax paying entity. And then

also estates and trusts also file a tax return. So we have individuals, corporations, partnerships,

and estates and trusts all that pay -- that file a tax return and pay directly to the

IRS. Okay. And so on Page 1. -- 1-5, the main section

that I want to cover today is to look at your tax formula. How does it get down to the point

of when I do a tax return that I owe versus a refund? That's so important to people. I

do tax returns, I volunteer to do tax returns, and sometimes people don't understand, well,

why do I owe, you know. Or why didn't I get a refund? I got a refund last year. What makes

up this formula that comes down to the fact that I get a refund versus owing at the end

of the year? So we're going to look at the tax formula and look at what happens as we

-- as individuals -- because that's our focus is looking at individuals this year. So what

is the -- how does it get down to me owing, you know, what happens that makes me owe versus

getting a refund. I would prefer to get a refund, okay.

So the first thing we want to do is what happens as we work? As we work, we pay the IRS in

the form of withholdings, okay. So as you work and you get paid, the IRS withholds a

portion of your income and they keep it. They keep it for tax purposes. And so the IRS does

not want me as an employee to say, oh, I'll just wait and I'll pay you everything I owe

you at the end of the year. They have a pay-as-you-go program. So that's withholdings. So when you

get your paycheck, every time, you give a little bit to the IRS, along with the State,

along with, if you live or work in Kansas City, Kansas City earnings. And so we know

that. So that's what's happening, our federal withholdings is going directly to the Internal

Revenue Service on our behalf. So as we work, we -- what we do is all our -- a portion of

our income is withheld by the IRS, withheld by our job, and they send it in to the IRS.

So then what we do at the end of the year, we say, okay, how much income did I make this

year? What is my gross income? And so, therefore, that is the starting point for our tax formula

that is on Page 1.5 and that we're going to look at here. So I want to blow this up a

little bit so you can see this. Okay. So let's look at our tax formula. So,

remember, we are at the point of gross income, and that's the starting point. And we will

begin a chapter and look at our gross income. But that's our starting point. The basic for

the IRS says that all your income is considered or included in your gross income. They want

you to put it all in there, okay. That's our starting point. And then what they may allow

you to do is have some deductions, okay. They're going to let you deduct some things or make

some adjustments to your gross income, okay. And so gross income being the starting point,

then we have less what we call adjustments to income. Okay. So we start off with our

gross income and then we deduct from that what we call our adjustments. We get to make

some adjustments to our income and we'll look at that. And that gets us to what we call

our adjusted gross income. Okay. So that gets us to our adjusted gross

income, which we label as our AGI. So that will get us to our adjusted gross income.

So basically we have our gross income. They say, okay, you can make a few adjustments,

so we can reduce that gross income by some adjustments that they may give us, okay. And

we get down to our adjusted gross income at that point. Okay. And so next we get to -- blow

that up just a little bit more. Okay. So next we get to have a deduction from our adjusted

gross income. We have what we call a standard deduction. This deduction is a deduction given

to you by the IRS. And it's based on your filing status, which we will look at. It's

the standard deduction. If I'm single it's a certain amount, if I'm married filing jointly

it's a certain amount, or if I'm head of household, and we'll look at all that in detail.

And then we also have the possibility of taking what we call itemized deductions, taking what

we call itemized deductions, and they appear on Schedule A. You may hear them called Schedule

A deductions or people may say they filed a long form, okay. You hear that a lot, too.

So what you do is you say, okay, these are my itemized deductions and that's like your

-- your charitable deductions, your medical deductions, your mortgage on your house, your

tax, personal property tax, and we'll look at that. So you look at your itemized deductions