Learning Goal
Today you will apply what you learned about:
- Individual income-tax procedures
- Tax compliance
- GAAP
- Income-tax law
- Book-tax differences
You will also prepare for the A3 and A4 competency assessment. Accounting_A_A3_A4_Tax_Complian…
Part 1 — Individual Tax Case
Jordan received:
- A W-2 from an employer
- A 1099 for freelance work
Describe the general process Jordan should follow.
Include:
1. What documents Jordan should gather.
2. How Jordan determines filing requirements and status.
3. How Jordan reports income.
4. How taxable income is determined.
5. How tax and credits are determined.
6. How withholding and payments are compared with tax liability.
7. How Jordan determines whether there is a refund or balance due.
8. What Jordan should do after completing the return.
Part 2 — Refund Calculation
Assume:
Federal income tax withheld: $3,200
Tax after credits: $2,850
Calculate the expected refund or amount due.
Show your work.
Part 3 — Book-to-Tax Case
A business reports:
Book income: $52,000
The business recorded:
$2,000 of expense that is not deductible for tax purposes
Questions
1. What is taxable income?
2. Should the $2,000 be added to or subtracted from book income?
3. Explain why.
Part 4 — Depreciation Case
A business records:
Book depreciation: $6,000
Tax law allows:
Tax depreciation: $9,000
Questions
1. What is the difference between book and tax depreciation?
2. Is taxable income higher or lower than book income because of this difference?
3. By how much?
4. Explain why.
Part 5 — Ethics and Compliance
Discuss the following:
Why must taxpayers:
- Report income accurately?
- Maintain appropriate records?
- Meet filing deadlines?
- Protect personal information?
Why must accountants understand:
- GAAP?
- Tax law?
- The difference between book income and taxable income?
- Ethical responsibilities?
Review — A3
Before the assessment, make sure you can:
- Put the tax-filing process in the correct order.
- Explain gross income.
- Explain taxable income.
- Calculate a simple refund or balance due.
- Identify W-2 and 1099 documents.
- Explain recordkeeping responsibilities.
- Explain why deadlines matter.
- Explain why taxpayer information must be protected.
- Distinguish tax avoidance from tax evasion.
Review — A4
Make sure you can:
- Explain the purpose of GAAP.
- Explain the purpose of income-tax law.
- Explain why book income and taxable income may differ.
- Classify examples as GAAP, tax law, or both.
- Complete a simple book-to-tax adjustment.
- Explain a depreciation difference.
- Explain permanent differences.
- Explain temporary differences.
- Explain why accountants need to understand both systems.
Self-Check
Rate yourself for each statement:
3 — I can do this without help
2 — I mostly understand it
1 — I need more practice
A3
___ I can explain the tax-filing process.
___ I can explain gross income and taxable income.
___ I can calculate a basic refund or amount due.
___ I can explain taxpayer compliance responsibilities.
___ I can distinguish tax avoidance from tax evasion.
A4
___ I can explain the purpose of GAAP.
___ I can explain the purpose of income-tax law.
___ I can explain a book-tax difference.
___ I can complete a basic book-to-tax adjustment.
___ I can distinguish permanent and temporary differences.
Competency Assessment
The assessment contains two separately scored sections:
A3 — Individual Income Tax Procedures
20 points
A4 — GAAP vs. Income Tax Law
20 points
The recommended proficiency target is:
75% or higher on A3
and
75% or higher on A4. Accounting_A_A3_A4_Tax_Complian…
This structure should work much better for the website: the main page is the unit overview, while each subpage contains only what the student needs for that day.