Read through these slides if you want to learn: 1. How to boost your take home pay 2. How to choose the right tax filing status 3. That there's no escaping Uncle Sam on earned income 4. The standard deduction may be enough 5. All earned income is not taxed equally 6. How to take advantage of the child tax and dependent care tax credits 7. Don’t forget incentives designed to offset higher education costs 8. Financial literacy resources are at your fingertips - PRA Group's Damon DeSue presented these '8 tips to know about taxes" at West Virginia University's financial literacy event.

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8 TIPS TO KNOW ABOUT TAXES

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§ This presentation has been
prepared for informational
purposes only, and is not
intended to provide, and
should not be relied on for,
tax, legal, or accounting
advice. You should consult
your own tax, legal, and
accounting advisors.
Before We Begin

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Taxes & Why We Pay Them

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Types of Tax
§ Income taxes: individual & corporate,
capital gains
§ Sales & gross receipts taxes
§ Property taxes
§ Estate & gift taxes
§ Excise taxes: gas tax, user fees, sin taxes,
luxury taxes
§ Payroll taxes: Social Security & Medicare
§ Tariffs

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Agenda: 8 Tips To Know About Taxes
This presentation will teach you…
1. How to boost your take home pay
2. How to choose the right tax filing status
3. There’s no escaping Uncle Sam on earned income
4. The standard deduction may be enough
5. All earned income is not taxed equally
6. How to take advantage of the child tax & dependent care tax credits
7. Don’t forget incentives designed to offset higher education costs
8. Financial literacy resources are at your fingertips

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Meet Joe Mountaineer and Suzy Mae Butterfly
§ Joe Mountaineer is a diehard WVU football faithful with
desires of one day graduating from WVU, working for an
accounting firm, and eventually returning to his studies to
become a CPA.
§ As a high-schooler, he has a part-time job at the local
grocery store. In college, Joe will major in accounting.
§ Joe also has plans to marry his long-time girlfriend, Suzy
Mae, have two children, and buy a house in Morgantown,
WV.
§ Joe and Suzy Mae have a lot of questions about taxes and
want to know how some of these life decisions will impact
their financial responsibilities.

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Joe’s Prior Year Tax Liability – 1040 Filer
Part Time Filing
At Joe’s part-time job at the local grocery store, he earned $15,000 in
calendar year 2021. Joe’s tax filing status is “single” with no
dependents.
What is Joe’s tax liability before credits as a single tax filer?
W-2 Income: $15,000
Standard Deductions: ($12,550)
Taxable Income: $2,450
Tax Rate: 10%
Tax Before Credits: $245

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Tip #1: Boost Take-Home Pay
Joe Mountaineer Lands His First Accounting Job Making $50,000
§ As part of the employment onboarding process, Joe fills out
some critical tax forms.
§ Form W-4, Employee’s Withholding Certificate
§ Form WV/IT-104, West Virginia Employee Withholding
Exemption Certificate
§ The # of exemptions selected determines the amount of
Federal and state taxes your employer is require to withhold
from your wages.
§ The higher the exemptions, the less they are required to
withhold.

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Tip #2: Choose the Right Filing Status
Joe Mountaineer and Suzy Butterfly Tie the Knot
§ Common filing status options for married couples
§ Married filing jointly
§ Married filing separately
§ Selecting the right filing status impacts the amount of tax
owed on Joe’s $50,000 accountant salary
§ If Joe and Suzy file separately as a married couple, Federal
tax owed before deductions is $6,616
§ If Joe and Suzy file jointly, Federal tax owed before
deductions is $5,589

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Tip #3: No Escaping Uncle Sam on Earned Income
Suzy Butterfly Helps Joe Get His CPA Dream off the Ground
§ The Gig Economy has grown by 15% over the past decade. Suzy
starts a tax filing business to support Joe while he becomes a CPA.
§ Business owners are responsible for paying taxes:
§ Sole proprietors file their net earnings on Form 1040
§ Federal and state taxes
§ Social Security and Medicare taxes from self-employment
§ Suzy earns $10,000 in gross fees and incurs $4,000 in tax deductible
expenses (e.g., office rent, supplies, telephone, tax software licensing,
etc.).
§ Now, Joe and Suzy’s income reportable on Form 1040 is $56,000.

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Tip #4: The Standard Deduction May Be Enough
Choosing Between the Standard Deduction and Itemized Deductions
§ Taxpayers may choose the greater of the standard deduction or Schedule A itemized deductions.
§ The standard deduction for 2022 is $25,900
§ Common Schedule A Itemized deductions
§ Medical Expenses
§ Home Mortgage Interest (recent increases in interest rates will add value to this deduction)
§ State & Local Taxes
§ Charitable Contributions
§ Joe and Suzy’s Schedule A Itemized deductions for 2022 were $15,000

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Tip #5: All Earned Income Is Not Taxed Equally
Joe & Suzy Mountaineer Understanding the Graduated Tax System (2021 Table)
*Table source: https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets

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Tip #6: Take Advantage of the Child Tax & Dependent Care Tax Credits
Joe and Suzy Welcome Their First Child
§ Child Tax Credit
§ $2,000 per qualifying child for tax year 2022
§ Dependent children under the age of 17
§ Refundable up to $1,500 for 2022
§ Dependent Care Tax Credit
§ Covers qualified childcare cost
§ Qualifying expenses: $8,000 for one child and $16,000 for two children

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Tip #7: Don’t Forget Incentives Designed to Offset Higher Education Costs
Joe Reduces His Education Bill with Tax Incentives
§ American Opportunity Tax Credit: helps pay for education expenses paid for the first four years of
education completed after high school. You can get a maximum annual credit of $2,500 per eligible
student and 40% or $1,000 could be refunded if you owe no tax.
§ Lifetime Learning Tax Credit: offsets the cost of tuition and related expenses. It can help eligible
students pay for undergraduate, graduate, and professional degree courses, as well as courses taken
to get or improve job skills. There is no limit on the number of years you can claim the credit. The
credit is worth up to $2,000 per tax return.
§ Student Loan Interest Deduction: allows borrowers to subtract up to $2,500 of the interest paid on
qualified student loans from their taxable income.
*Tax credit source: https://www.irs.gov

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Joe’s Current Year Tax Liability – 1040 Filer
A lot has changed for Joe & Suzy in 2022. Their filing status is now “married filing jointly” with
one dependent.
What is their tax liability before credits now?
W-2 Income: $50,000
1099 Net Income: $6,000
Standard Deductions: ($25,900)
Taxable Income: $30,100
Graduated Tax Rate: 10%/12%
Tax Before Credits: $3,201

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Tip #8: Financial Literacy Resources Are at Your Fingertips
Joe and Suzy Mountaineer Use Online Financial Resources
§ American Institute of Certified Public Accountants (AICPA)
§ Website: StartHereGoPlaces website
§ West Virginia Society of Certified Public Accountants (WVCPA)
§ Website: Public Resources | WVSCPA - West Virginia Society of
Certified Public Accountants
§ Internal Revenue Service
§ Website:
https://apps.irs.gov/app/understandingTaxes/teacher/index.jsp

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§ Accounting is not about math—it’s about problem solving.
§ It has job security and opportunities for advancement.
§ It’s part of every business, nonprofit or government organization.
Working With Taxes: Accounting
Joe Became An Accountant; You Can Be One Too!
§ Accounting is versatile with room for growth. Jobs include auditor, bookkeeper, tax accountant, financial
analyst, controller, accounting manager, public accountant, forensic accountant, etc.
§ It has a lower-than-average unemployment rate. The U.S. Bureau of Labor Statistics projects accountant
employment will grow 10% by 2026.
§ The best way to learn more is to take an accounting course in high school.

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§ As a global leader in acquiring
and collecting nonperforming
loans, PRA Group returns capital
to banks and other creditors to
help expand financial services
for consumers.
§ Through our subsidiaries, we
collaborate with customers to
develop flexible,
affordable payment options to
help them resolve their debt.
About PRA Group

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