From the course: Finance Foundations: Income Taxes

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Joint Form 1040: Computing adjusted gross income (AGI)

Joint Form 1040: Computing adjusted gross income (AGI)

From the course: Finance Foundations: Income Taxes

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Joint Form 1040: Computing adjusted gross income (AGI)

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- As we prepare to enter the numbers for Ramone and Kay's income, We start by gathering up the necessary pile of documents. First in the United States your employer is going to send you a document called the form W2. This form comes right from your employer and it lists wages, salaries, and income taxes withheld by your employer. By the way, keep in mind that your employer sends this exact same information to the Internal Revenue Service. So the computers at the IRS already know how much of this income you had before you ever sent in your income tax filing. Now if Ramone and Kay had jobs on the side. Each would get a form 1099 which lists how much money was paid to them by their clients or their customers. Examples of form 1099 income are consulting fees received by attorneys, accountants and engineers. And sales commissions received by freelance sales people. To keep this example simple, Ramone and Kay do not have any side jobs. All of their work earnings came from their regular…

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