Contents

Important Changes ............................................ 1

Important Reminders ......................................... 2

Introduction ........................................................ 2

Where Do My Tax Dollars Go? ......................... 2

How Is My Tax Figured? ................................... 2

How Do I Pay My Tax? ...................................... 3

How Does My Employer Decide How Much To

Withhold? .................................................. 3

What If My Withholding Does Not Match My

Tax? .......................................................... 4

Can I Ask My Employer Not To Withhold Tax? 4

Must I File a Return? ......................................... 4

What Kinds of Income Are Taxable? ............... 5

Pay for Services Performed ............................ 5

Self-Employment Income ................................. 6

Investment Income .......................................... 6

Taxable Scholarships and Fellowships ........... 7

Other Income ................................................... 8

What Can I Deduct on My Return? .................. 8

What Can I Subtract From My Tax? ................. 8

How Do I File a Return? .................................... 9

Putting Your Return Together ......................... 9

Alternative Filing Methods ............................... 10

What Tax Records Should I Keep? .................. 10

When Will I Get My Refund? ............................. 10

Sample Tax Forms ............................................. 10

Form W–4 ........................................................ 10

Form 1040EZ ................................................... 11

Schedule C–EZ ................................................ 12

How To Get Tax Help ......................................... 12

Important Changes

Interest on student loans. You may be able to deduct

up to $2,000 for interest paid on a qualified student

loan. See Deductible student loan interest under What

Can I Deduct on My Return, later.

Paid preparer authorization. Beginning with your return for 2000, you can check a box and authorize the

IRS to discuss your tax return with the paid preparer

who signed it. If you check the “Yes” box in the signature area of your return, the IRS can call your paid

preparer to answer any questions that may arise during

the processing of your return. Also, you are authorizing

your paid preparer to perform certain actions. See your

income tax package for details.

Department of the Treasury

Internal Revenue Service

Publication 4

Cat. No. 46073X

Student's

Guide

to

Federal

Income Tax

For use in preparing

2000 Returns
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of

missing children selected by the Center may appear in

this publication on pages that would otherwise be blank.

You can help bring these children home by looking at

the photographs and calling 1–800–THE–LOST

(1–800–843–5678) if you recognize a child.

Important Reminder

Child tax credit. You may be able to claim a tax credit

of up to $500 for each of your qualifying children under

the age of 17. See Child tax credit under What Can I

Subtract From My Tax, later.

Introduction

This guide explains the federal income tax laws of

particular interest to high school and college students.

It will help you decide if the income you receive (such

as wages, tips, interest, or a scholarship or fellowship)

is taxable. It will also help you decide if you should have

tax taken out (withheld) from your pay and if you should

file an income tax return.

The rules explained in this guide apply to students

who are U.S. citizens and unmarried (single). If you are

a foreign student studying in the United States, you

should see Publication 519, U.S. Tax Guide for Aliens.

Comments and suggestions. We welcome your

comments about this publication and your suggestions

for future editions.

You can e-mail us while visiting our web site at

www.irs.gov/help/email2.html.

You can write to us at the following address:

Internal Revenue Service

Technical Publications Branch

W:CAR:MP:FP:P

1111 Constitution Ave. NW

Washington, DC 20224

We respond to many letters by telephone. Therefore,

it would be helpful if you would include your daytime

phone number, including the area code, in your correspondence.

Useful Items

You may want to see:

 Publication

 501 Exemptions, Standard Deduction, and Filing

Information

 505 Tax Withholding and Estimated Tax 

 508 Tax Benefits for Work-Related Education

 520 Scholarships and Fellowships 

 919 How Do I Adjust My Tax Withholding?

 970 Tax Benefits for Higher Education

Form (and Instructions)

 1040EZ Income Tax Return for Single and Joint

Filers With No Dependents

 Schedule C–EZ (Form 1040) Net Profit From

Business (Sole Proprietorship) 

See How To Get Tax Help near the end of this publication for information about getting these publications

and forms.

Where Do My

Tax Dollars Go?

We pay taxes to help our government raise income

(called “revenue”) to meet its expenses. The revenue

raised by the personal income tax and other federal

taxes, such as employment taxes (including social security and Medicare taxes), excise taxes, and estate

and gift taxes, is used to provide a wide variety of services to the public. Among these are our national defense, conservation of our natural resources, and aid

to public education.

The social security tax pays for old age, survivor, and

disability pension payments when you become eligible

for them. The Medicare tax pays for basic Medicare

insurance coverage. Both employees and employers

pay these taxes.

How Is My Tax Figured?

You are responsible for reporting your income to the

Internal Revenue Service (IRS) and figuring the tax due

on it. You do this by filing an income tax return each

year you meet the filing requirements. The IRS provides

tax forms, instructions, and publications to help you.

These forms, instructions, and publications are based

on the tax laws passed by Congress that are contained

in the Internal Revenue Code.

Taxable income. Wages, tips, and other fees you receive for work you do, all count as income for tax purposes. Investment income, such as interest on your

savings account and dividends, also counts as income

for tax purposes.

The law allows you to deduct certain amounts from

your income before you figure the tax due on it. These

include the personal exemption (if you are entitled to

claim one) and the standard deduction (or itemized

deductions if you can itemize). These amounts are explained later. What remains is your taxable income.

Tax rates. Your tax is a percentage of your taxable

income. There are five tax rates, 15%, 28%, 31%, 36%,

and 39.6%. If you are single and your taxable income

is not more than $26,250 for 2000, your tax is the

amount of your taxable income times 15% (.15).

The 28% rate applies to taxable income over

$26,250 but not over $63,550, and the higher rates

apply to taxable income over $63,550.

Page 2
Computing tax. Generally, if your taxable income is

less than $100,000, you do not compute the tax yourself. Instead, the math has been done for you in the

Tax Table that is included in the instructions to the tax

form.

You use the Tax Table unless one of the following

is true.

1) Your taxable income is $100,000 or more. In that

case, use Tax Rate Schedule X. 

2) You are required to use Form 8615, Schedule D

(Form 1040), or the Capital Gain Tax Worksheet

(in the Form 1040 instructions).

Maximum tax rates on net capital gain. For 2000

the maximum rate on a net capital gain may be 10%,

20%, 25%, or 28%, depending on the situation.

You may have a net capital gain if you sold stock or

other property during the year. If you need details, see

Publication 550, Investment Income and Expenses.

How Do I Pay My Tax?

Federal income tax is collected on a “pay-as-you-go”

system. This means you must pay tax on the income

you earn at the time you receive it. There are two ways

to pay your tax. You can have tax withheld from your

wages and you can make estimated tax payments on

income that is not subject to withholding.

Withholding on wages. Your employer will generally

withhold tax from your paycheck and deposit it in a

federal bank. The amount withheld is based on information received from your completed Form W–4, Employee's Withholding Allowance Certificate. The form

and its worksheet will help you to calculate the proper

“withholding.”

If, at the end of the year, you have not paid all of the

tax due, you may be subject to a penalty for failure to

pay estimated tax. To prevent this, you can have more

tax withheld by revising Form W–4 (discussed later) or

by making estimated tax payments.

Estimated tax payments. Estimated tax payments are

generally required if no tax is withheld from your income. For example, tax is not generally withheld from

self-employment and investment income. If you are

self-employed or receive investment income, you may

need to make estimated tax payments.

Generally, the law requires you to pay estimated tax

for 2001 if you expect to owe $1,000 or more when you

file your return, unless the amount you will have withheld is at least:

1) 90% of the tax to be shown on your 2001 income

tax return, or

2) 100% of the tax shown on your 2000 income tax

return.

If you need to make estimated tax payments, get

Form 1040–ES, Estimated Tax for Individuals. It has a

worksheet and instructions that will help you estimate

your income tax for the coming year and figure how

much estimated tax you need to pay. Usually you divide

the amount you need to pay for the year by four and

make four equal payments of tax. These are due on

April 15, June 15, September 15, and January 15 (of

the following tax year). If the due date falls on a Saturday, Sunday, or legal holiday, the payment will be on

time if it is made on the next day that is not a Saturday,

Sunday, or legal holiday. See Publication 505, Tax

Withholding and Estimated Tax, for more information.

How Does My Employer

Decide How Much To Withhold?

Your employer generally uses information received

from you to figure how much of your pay to withhold for

federal income tax. When you get a job, one of the first

things your employer will do is ask you to complete

Form W–4. Form W–4 includes three types of information that your employer will use to figure your withholding.

1) Whether to withhold at the single rate or at the lower

married rate. 

2) How many withholding allowances you claim (each

allowance reduces the amount withheld).

3) Whether you want an additional amount withheld.

An example of a filled-in Form W–4 appears at the

end of this publication.

Claiming withholding allowances. Use the Personal

Allowances Worksheet on page 1 of Form W–4 to figure

your withholding allowances. The worksheet is there to

help you figure the correct number of withholding allowances you can claim. For many students this will be

one allowance. The worksheet is for your own records.

You do not have to turn it in to your employer. You can

have more tax withheld by claiming fewer withholding

allowances.

TIP

If you work for more than one employer at a

time, you will be asked to complete a Form W–4

by each employer. If, after reading the Form

W–4 worksheet, you decide you are entitled to claim

one allowance, claim one allowance at the higher paying job and zero allowances at your other job. Do not

claim the same withholding allowances at both jobs

because not enough tax will be withheld during the

year.

Additional amount. You want to have enough tax

withheld so you won't have to make estimated tax

payments, as explained earlier, or be charged an estimated tax penalty for not paying enough tax during the

year.

To make sure you are getting the right amount of tax

withheld, get Publication 919. It will help you compare

the total tax to be withheld during the year with the tax

you can expect to figure on your return. It will also help

you determine how much, if any, additional withholding

is needed each payday to avoid owing tax when you file

your return. If you do not have enough tax withheld, you

may have to make estimated tax payments, as explained earlier.

Page 3
What If My Withholding Does Not

Match My Tax?

Your withholding probably won't match your tax liability

exactly. So when you report your income and figure the

tax on your tax return, you will usually find that you

either underpaid or overpaid your tax. If you owe, you

should pay the balance due when you file your return.

You can pay by check, money order, or credit card. If

you paid too much, the IRS will issue you a refund after

you file your return. You can also request direct deposit

of your refund. For more information, see the Form

1040, Form 1040A, or Form 1040EZ instructions.

Can I Ask My Employer

Not To Withhold Tax?

Do you have a part-time job but are not earning enough

to be required to file a tax return? If so, you can ask

your employer not to withhold income tax for 2001 by

claiming exemption from withholding if both of the following are true.

1) For 2000 you had a right to a refund of all income

tax withheld because you had no tax liability.

2) For 2001 you expect a refund of all income tax

withheld because you expect to have no tax liability.

CAUTION

! Students are not automatically exempt from

withholding. You can claim exemption only if

both of the above statements are true.

Dependents. You cannot claim exemption from withholding for 2001 if someone will be able to claim you

as a dependent on his or her tax return for 2001 and

your 2001 income will be over $750 and will include

more than $250 of unearned income. 

Claiming exemption. You claim exemption from

withholding on Form W–4. Fill in the identifying information at the top of the form and skip lines 5 and 6.

On line 7 write the word “EXEMPT.” Then sign and date

the form.

Generally, the exemption from withholding expires

on February 15 of the year following the year for which

you claim exemption. If you remain eligible and want

to claim exemption from withholding for that following

year, you generally must give your employer a new

Form W–4 by February 15 of that year.

If you claimed exemption from withholding but your

situation changes (for example, you received a raise in

pay or you are working more hours), you have 10 days

from the day you reasonably believed you were no

longer exempt from tax to give your employer a new

Form W–4. You should claim the correct number of

withholding allowances on the new form so your employer will withhold the correct amount of tax.

Must I File a Return?

Whether you must file a tax return depends on:

• Whether your parent or someone else can claim you

as a dependent on his or her tax return (regardless

of whether or not that person actually claims you),

• How much gross income you received, and

• What kinds of income you received.

Can you be claimed as a dependent? If more than

half of your support for the year is provided by another

person, you can generally be claimed as a dependent.

That person will usually be your parent (or someone

else who is related to you or whose household you are

a member of).

Support. This includes amounts spent for food,

lodging, clothing, education, medical and dental care,

recreation, transportation, and similar necessities. To

determine whether you can be claimed as a dependent,

do not include qualified scholarships and fellowships in

figuring support if you are a full-time student.

Dependents. If you can be claimed as a dependent,

you must file a tax return for 2000, if any of the following

apply.

1) Your unearned income was more than $700 (if not

blind).**

2) Your earned income* was over $4,400 (if not

blind).**

3) The total of your unearned and earned income was

more than the larger of — 

a) $700 (if not blind),** or

b) Your earned income (up to $4,150) plus $250

(if not blind).**

*Includes any part of a taxable scholarship or fellowship grant that you must include in your income, as

explained later under What Kinds of Income are Taxable?

**Plus $1,100 if blind.

Under age 14. If you are under age 14 and certain

conditions apply, your parent can elect to include your

income on his or her return. If your parent makes this

election, you do not have to file a return. See Publication 929, Tax Rules for Children and Dependents.

Not a dependent. If you cannot be claimed as a dependent by someone else, you must file a return for

2000 if your gross income for the year was $7,200 or

more.

Income from self-employment. Your total earnings

from self-employment (generally gross business income

before subtracting your business expenses) are

counted in your gross income for purposes of the filing

requirements discussed earlier.

Page 4
Example. You earned $700 from providing typing

services on weekends. Your expenses totaled $325.

Your net earnings from self-employment were $375

($700 − $325). You must count the $700 (rather than

the $375) in your income when figuring whether you

are required to file a return.

Net earnings of $400 or more. Even if you are not

otherwise required to file a return, you must file one if

your net earnings from self-employment were $400 or

more. This is because you must pay self-employment

tax. See Self-Employment Income, later.

Example. During the summer you mowed lawns.

You earned $500 after subtracting your expenses. You

must file a tax return and pay self-employment tax because your net earnings were $400 or more.

TIP

If you are not required to file a return, and income tax was withheld from your pay because

you did not claim exemption from withholding,

you will be entitled to a refund of all the income tax

withheld. You must file a tax return to get it, even

though you would not be otherwise required to file.

What Kinds of Income

Are Taxable?

The following kinds of income often received by students are generally taxable.

• Pay for services performed.

• Self-employment income.

• Investment income.

• Certain scholarships and fellowships.

Pay for Services Performed

When figuring how much income to report, include everything you received as payment for your services.

This usually means wages, salaries, and tips.

Wages and salaries. The amount of wages (including

tips) or salaries you received during the year is shown

in box 1 of Form W–2, Wage and Tax Statement. Your

employer will give you Form W–2 soon after the end

of the year.

Tips. All tips you receive are income, and subject to

income tax. This includes tips customers give you directly, tips customers charge on credit cards that your

employer gives you, and your share of tips split with

other employees.

RECORDS

Keep a daily record or other proof of your tips.

You can use Form 4070A, Employee's Daily

Record of Tips. Your daily record must show

your name and address, your employer's name, and the

establishment's name. For each day worked, you must

show the amount of cash and charge tips you received

from customers or other employees, a list of the names

and amounts you paid to other employees through tip

splitting, and the value of any noncash tips you get,

such as tickets, passes, or other items of value. Record

this information on or near the date you receive the tip

income.

Reporting tips to your employer. If you receive

cash, check, or credit card tips of $20 or more in any

one calendar month while working for one employer,

you must report the total amount of your tips to your

employer by the 10th day of the next month. If the 10th

falls on a Saturday, Sunday, or legal holiday, give your

employer the report on the next day that is not a Saturday, Sunday, or a legal holiday.

To report your tips, you can use Form 4070, Employee's Report of Tips to Employer. To get a year's

supply of this form, ask your employer or call the IRS

for Publication 1244, Employee's Daily Record of Tips

and Report to Employer. Fill in the information asked

for on the form, sign and date the form, and give it to

your employer. If you do not use Form 4070, give your

employer a statement with the following information.

• Your name, address, and social security number.

• Your employer's name, address, and business

name (if it is different from the employer's name).

• The month (or the dates of any shorter period) in

which you received tips.

• The total tips required to be reported for the period.

Withholding on tips. Your employer must withhold

social security tax and Medicare taxes or railroad retirement tax, and any income tax due on the tips you

report. Your employer usually deducts the withholding

due on tips from your wages. If your wages are too

small for your employer to withhold taxes, you may give

him or her extra money to pay the taxes up to the close

of the calendar year. Your employer should tell you how

much is needed.

Any taxes that remain unpaid may be collected by

your employer from your next paycheck. If withholding

taxes remain uncollected at the end of the year, you

may be subject to a penalty for underpayment of estimated taxes. See Publication 505, Tax Withholding and

Estimated Tax, for more information.

Form W–2. The tips you reported to your employer

will be included with your wages in box 1 of Form W–2.

Federal income tax, social security tax, and Medicare

tax withheld on your wages and tips will be shown in

boxes 2, 4, and 6, respectively.

Your Form W–2 may show an amount in box 8, “Allocated tips.” This is an additional amount allocated to

you if tips you reported to your employer were less than

the minimum amount expected to be earned by employees where you work.

If you do not have adequate records of your actual

tips, you must report at least the amount of allocated

tips shown in box 8 on your Form W–2.

If you have adequate records, report your actual tips

on your return. For more information on allocated tips,

see Publication 531, Reporting Tip Income.

CAUTION

! If you did not report tips to your employer as

required, you may be charged a penalty in addition to the tax you owe. If you have reasonable

cause for not reporting tips to your employer, you

should attach a statement to your return explaining why

you did not. 

Page 5
Reserve Officers' Training Corps (ROTC).

Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However,

active duty pay, such as that received during summer

advanced camp, is taxable.

Example. Jim Hunter is a member of the ROTC who

is participating in the advanced course. He received a

subsistence allowance of $100 each month for 10

months and $600 of active duty pay during summer

advanced camp. He must include only the $600 active

duty pay in his gross income.

Self-Employment Income

Earnings you received from self-employment are subject to income tax. These earnings include income from

baby-sitting and lawn mowing. These earnings are not

self-employment income if you provided these services

as an employee.

You are taxed on your net earnings (income you

received minus any business expenses you are allowed

to deduct). For information on what expenses can be

deducted, see Publication 535, Business Expenses. As

a self-employed person, you are responsible for keeping records to show how much income you received

and how many expenses you had. Your income and

expenses are reported on Schedule C or C–EZ (Form

1040). An example of a filled-in Schedule C–EZ appears at the end of this publication.

Self-employment tax. If you had net earnings of $400

or more from self-employment, you also will have to pay

self-employment tax. This tax pays for your benefits

under the social security system. Social security and

Medicare benefits are available to individuals who are

self-employed the same as they are to wage earners

who have social security tax and Medicare tax withheld

from their wages. The self-employment tax is figured

on Schedule SE (Form 1040). For more information

on self-employment tax, see Publication 533, SelfEmployment Tax.

Newspaper carriers and distributors. Special rules

apply to services you perform as a newspaper carrier

or distributor. You are a direct seller and treated as

self-employed for federal tax purposes if you meet the

following conditions.

1) You are in the business of delivering/distributing

newspapers or shopping news, including directly

related services such as soliciting customers and

collecting receipts. 

2) Substantially all your pay for these services directly

relates to sales or other output rather than to the

number of hours worked.

3) You perform the delivery services under a written

contract between you and the service recipient that

states that you will not be treated as an employee

for federal tax purposes.

Carriers and vendors under age 18. Carriers or

distributors (not including those who deliver or distribute

to any point for subsequent delivery or distribution) and

vendors (working under a buy-sell arrangement) under

age 18 are not subject to self-employment tax.

TIP

If you were self-employed, you can deduct half

of your self-employment tax and part of your

health insurance premiums. See the Form 1040

instructions for lines 27 and 28 for more information.

Investment Income

This section explains whether you have to report income from bank accounts and certain other investments. Various types of investment income are treated

differently. Some of the more common ones are discussed here.

Interest. Interest you get from checking and savings

accounts and most other sources is taxable.

Bank accounts. Some credit unions, building and

loan associations, savings and loan associations, mutual savings banks, and cooperative banks call what

they pay you on your deposits “dividends.” However, for

tax purposes, these payments are considered interest,

and you should report them as interest.

U.S. savings bonds. Interest on U.S. savings

bonds is taxable for federal income tax purposes, but

exempt from all state and local income taxes. The most

common bonds are series EE and series I bonds. Series EE bonds are issued in several different denominations and cost one-half the amount shown on the face

of the bond. For example, a $100 bond costs $50. The

face value of the bond is paid only when the bond matures. The difference between what you paid for the

bond and the amount you get when you cash it is taxable interest.

Series I bonds are inflation-indexed bonds issued at

their face value. The face value plus accrued interest

is payable to you at maturity.

You can report all interest on these bonds when you

cash them, or you can choose to report their increase

in value as interest each year. Publication 550, Investment Income and Expenses, explains how to make this

choice.

Under certain circumstances, the interest on U.S.

savings bonds (series EE and series I) issued after

December 31, 1989, is exempt from tax if the bonds

are used for educational purposes. See Publication 550

for further information.

Other interest from the U.S. Government. Interest

on U.S. Treasury bills, notes, and bonds is taxable for

federal income tax purposes. This interest is exempt

from all state and local income taxes.

Tax-exempt bonds. Generally, interest from bonds

issued by state and local governments is not taxable for

federal income tax purposes.

Interest statements. Your bank, savings and loan,

or other payer of interest will send you a statement if

you earned at least $10 in interest for the year. You

should receive these statements sometime in January

for the previous tax year. Banks may use Form

1099–INT, Interest Income. However, they may include

your total interest on the statement they send you at the

end of the year. Do not throw these statements away.

Dividends. Dividends are distributions of money,

stock, or other property paid to you by a corporation.

You may also get dividends through a partnership, an

estate, a trust, or an association that is taxed as a

corporation. Ordinary dividends, the most common

Page 6
type, are paid out of the corporation's earnings. You

must report these as income on your tax return.

Dividend statements. Regardless of whether you

receive your dividends in cash or additional shares of

stock, the payer of the dividends will send you a Form

1099–DIV, Dividends and Distributions, if you earned

at least $10 in dividends for the year.

Other investment income. If you received income

from investments not discussed here, see Publication

550. Also, the payer of the income may be able to tell

you whether the income is taxable or nontaxable.

Taxable Scholarships

and Fellowships

If you received a scholarship or fellowship, all or part

of it may be taxable, even if you did not receive a Form

W–2. Generally, the entire amount is taxable if you are

not a candidate for a degree.

If you are a candidate for a degree, you generally

can exclude from income that part of the grant used for:

• Tuition and fees required for enrollment or attendance, or

• Fees, books, supplies, and equipment required

for your courses.

You cannot exclude from income any part of the

grant used for other purposes, such as room and board.

A scholarship generally is an amount paid for the

benefit of a student at an educational institution to aid

in the pursuit of studies. The student may be in either

a graduate or an undergraduate program.

A fellowship grant generally is an amount paid for

the benefit of an individual to aid in the pursuit of study

or research.

Example 1. Tammy Graves receives a $6,000 fellowship grant that is not designated for any specific use.

Tammy is a degree candidate. She spends $5,500 for

tuition and $500 for her personal expenses. Tammy is

required to include $500 in income.

Example 2. Ursula Harris, a degree candidate, receives a $2,000 scholarship, with $1,000 specifically

designated for tuition and $1,000 specifically designated for living expenses. Her tuition is $1,600. She

may exclude $1,000 from income, but the other $1,000

designated for living expenses is taxable and must be

included in income.

Payment for services. All payments you receive for

past, present, or future services must be included in

income. This is true even if the services are a condition

of receiving the grant or are required of all candidates

for the degree.

Example. Gary Thomas receives a scholarship of

$2,500 for the spring semester. As a condition of receiving the scholarship, he must serve as a part-time

teaching assistant. Of the $2,500 scholarship, $1,000

represents payment for his services. Gary is a degree

candidate, and his tuition is $1,600. He can exclude

$1,500 from income as a qualified scholarship. The

remaining $1,000, representing payment for his services, is taxable.

Fulbright students and researchers. A Fulbright

grant is generally treated as any other scholarship or

fellowship in figuring how much of the grant can be

excluded. If you receive a Fulbright grant for lecturing

or teaching, it is payment for services and subject to

tax.

Pell Grants, Supplemental Educational Opportunity

Grants, and Grants to States for State Student Incentives. These grants are nontaxable scholarships to

the extent used for tuition and course-related expenses

during the grant period.

Reduced tuition. You may be entitled to reduced tuition because you or one of your parents is or was an

employee of the school. If so, the amount of the reduction is not taxable so long as the tuition is for education below the graduate level. (But see Graduate

student exception, next.) The reduced tuition program

must not favor any highly paid employee. The reduced

tuition is taxable if it represents payment for your services.

Graduate student exception. Tax-free treatment

of reduced tuition can also apply to a graduate student

who performs teaching or research activities at an educational institution. The qualified tuition reduction must

be for education furnished by that institution and not

represent payment for services.

Contest prizes. Scholarship prizes won in a contest

are not scholarships or fellowships if you do not have

to use the prizes for your education. If you can use the

prize for any purpose, the entire amount is taxable.

Qualified state tuition program. If you receive distributions from a qualified state tuition program, only the

amount that is more than the amount contributed to the

program is taxable. Part of the benefits may qualify as

a nontaxable scholarship or fellowship (for example,

matching-grant amounts paid under the program to a

degree candidate). Other benefits are partly a nontaxable return of the contributions made to the program

on your behalf (for example, by your parents). You must

include in your income the part of the benefits that is

neither a nontaxable scholarship or fellowship nor a

return of contributions. For more information about

qualified state tuition programs, see Publication 525,

Taxable and Nontaxable Income, but for more information on a specific program, contact the state or

agency that established and maintains it.

Other grants or assistance. If you are not sure

whether your grant qualifies as a scholarship or fellowship, ask the person who made the grant.

Additional information. See Publication 520, Scholarships and Fellowships, for more information on how

much of your scholarship or fellowship is taxable.

How To Report

If you file Form 1040EZ, include the taxable amount of

your scholarship or fellowship on line 1. Print “SCH” and

any taxable amount not reported on a W–2 form in the

space to the right of the words “W–2 form(s)” on line

1.

Page 7
If you file Form 1040A or Form 1040, include the

taxable amount on line 7. Print “SCH” and any taxable

amount not reported on a W–2 form in the space to the

left of line 7 on Form 1040A or on the dotted line next

to line 7 on Form 1040.

Other Income

If you are not sure whether to include any item of income on your return, see Publication 525.

What Can I Deduct

on My Return?

After you have totaled your income, you are allowed to

deduct (subtract) certain amounts to arrive at adjusted

gross income. For example, you can deduct interest

paid on a qualified student loan (discussed next). You

also are allowed to deduct certain amounts, such as a

standard deduction or itemized deductions (discussed

later), to figure your taxable income.

Deductible student loan interest. You may be able

to deduct interest you pay on your qualified student

loan. This applies to loan interest payments due and

paid in 2000.

You may be able to deduct the interest even if you

took out the loan before 2000. Regardless of when you

took out the loan, you can deduct only interest paid

during the first 60 months that interest payments are

required.

Example 1. You took out a qualified student loan in

1993. You made payments on the loan every month

as required, beginning October 1, 1995. You can deduct the interest of your first nine payments for 2000.

You cannot deduct the interest on any later payments

because they are after the 60–month period (October

1, 1995 — September 30, 2000).

Maximum deduction. Your deduction for 2000

cannot be more than $2,000. This limit increases to 

$2,500 for 2001 and later years.

Limit on deduction. Your deduction may be limited

depending on your modified adjusted gross income

(AGI). See the Form 1040 Instructions and the Student

Loan Interest Deduction Worksheet for these limits. 

Claiming the deduction. This deduction is an adjustment to income, so you can claim it even if you do

not itemize your deductions on Schedule A (Form

1040). You cannot claim the deduction if:

1) Another taxpayer claims you as a dependent, or

2) Your filing status is married filing a separate return.

You claim the deduction on line 24 of Form 1040 or

line 17 of Form 1040A. See your form instructions for

more information.

TIP

Use the Student Loan Interest Deduction

Worksheet in the form instructions to figure your

deduction.

Change in dependency status. You cannot deduct

interest on a student loan for any year you are claimed

as a dependent on another person's return. But you

can, subject to other requirements, deduct payments

made in a later year when you are no longer claimed

as a dependent.

Standard deduction. Most people are entitled to deduct a certain amount called the standard deduction

from their income. This amount is set by law and generally increases each year.

Dependent. If your parent or someone else can

claim you as a dependent, your standard deduction is

the greater of:

1) $700 ($1,800 if blind), or 

2) Your earned income plus $250, but not more than

$4,400 ($5,500 if blind).

Earned income for this purpose is income you received as payment for work you did, plus any part of a

scholarship or fellowship grant that you must include in

income.

Not a dependent. If no one can claim you as a

dependent, you can subtract a standard deduction of

$4,400 ($5,500 if blind).

Itemized deductions. You may have high medical

bills, pay a lot of mortgage interest or state and local

income taxes, or contribute large amounts to charity. If

these expenses add up to more than the amount of the

standard deduction, the law allows you to claim the

higher total instead of the standard deduction. To do

this, you must itemize (list) your deductible expenses

on Schedule A (Form 1040). As a student, you probably

do not have enough of these kinds of expenses to

itemize, but keep this in mind for future years when you

do.

Exemptions. Generally, you can subtract from income

your own personal exemption. This amount is $2,800

for 2000. It is set by law and generally increases each

year. However, if you can be claimed as a dependent

by your parents or others, you are not entitled to a

personal exemption.

What Can I Subtract

From My Tax?

After you have figured your tax, you may be able to

subtract certain amounts from it. These amounts are

called credits. They reduce your tax “dollar for dollar.”

Higher education tax credits. You may be able to

claim one of two education tax credits.

1) The Hope credit.

2) The lifetime learning credit.

The amount of each credit is determined by the

amount you pay for qualified tuition and related expenses and the amount of your modified adjusted gross

income. 

Page 8
What expenses qualify. The credits are based on

qualified tuition and related expenses you pay for

yourself or dependent you claim on your tax return. In

general, qualified tuition and related expenses are tuition and fees required for enrollment or attendance at

an eligible educational institution. Fees for courserelated books, supplies and equipment, and student

activity fees are included in qualified tuition and related

expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Qualified tuition and related expenses do not include the

cost of insurance, medical expenses (including student

health fees), room and board, transportation, or similar

personal, living or family expenses, even if the fee must

be paid to the institution as a condition of enrollment

or attendance. For more information, see Publication

970, Tax Benefits for Higher Education.

Child tax credit. If you have children, you may be entitled to a child tax credit for each qualifying child. You

must provide the name and identification number (usually the social security number) of each qualifying child

on your return. The maximum amount of the credit you

may claim is $500 for each qualifying child. 

Limit on credit. The credit may be limited depending on the amount of your tax liability and your modified

adjusted gross income. See the Form 1040 or 1040A

Instructions for more information.

Earned income credit. If you qualify for the earned

income credit, you may be able to get a refund from the

IRS even if you had no tax withheld. See Publication

596, Earned Income Credit, or the instructions for the

tax form you file, to see if you can claim this credit.

TIP

You do not have to have a qualifying child to

be able to claim the earned income credit in

2000. If you are at least 25 years old, have

earned income of less than $10,380, and cannot be

claimed as a dependent by another person, you may

be eligible for the credit.

Child and dependent care credit. If you have a child

and you were employed in 2000, you may be eligible

for the child and dependent care credit. See Publication

503, Child and Dependent Care Expenses, for more

information.

How Do I File a Return?

Before filing your return, make sure you have all your

wage and other income statements, along with the

correct tax form and instructions.

Income statements. In January, each of your employers should give you a Form W–2. It will show the

amount of wages you were paid during the past year

and how much tax (income, social security, and Medicare) was withheld. Your bank or other financial institution will send you Form 1099–INT or a similar statement showing the interest you earned during the past

year.

If you do not receive Form W–2 by January 31, ask

your employer for it. If you do not receive your Forms

1099–INT or other statements from your bank by January 31, call your bank and ask for them. If you have

not received these income statements by February 15,

call the IRS telephone number for your area. The

numbers are listed in the tax form instructions.

Tax return forms. You can probably use the shortest,

simplest form, Form 1040EZ. You can get it from your

local IRS office, post office or library. You can also

download it by accessing the IRS web site at

www.irs.gov.

You can also receive forms and instructions by fax,

using the phone attached to your fax machine and

calling 703–368–9694, 24 hours a day, 7 days a week.

To order by phone, call 1–800–829–3676. After you

have filed your first return, the IRS will send you blank

tax forms for your use in future filing seasons.

If you cannot file Form 1040EZ, file one of the longer

forms, Form 1040A or Form 1040, instead. You cannot

file Form 1040EZ if your income includes more than

$400 of taxable interest or any income other than

wages and tips, taxable scholarship or fellowship

grants, unemployment compensation, qualified state

tuition program earnings, or Alaska Permanent Fund

dividends. You cannot file Form 1040EZ or Form 1040A

if you had income from self-employment, you are reporting any allocated tips, or you itemize deductions as

explained earlier.

Due date of return. If you are required to file a tax

return for 2000, you must file it with the IRS by April

16, 2001.

You can receive an automatic 4-month extension to

file your return if by the regular due date you do any

of the following.

• File a paper Form 4868, Application for Automatic

Extension of Time To File U.S. Individual Income

Tax Return.

• File Form 4868 electronically by phone or over the

Internet.

• Pay part or all of your estimate of tax due electronically by using a credit card. (If you use this option,

you do not have to file Form 4868.)

An extension of time to file is not an extension of time

to pay. See Form 4868 for details.

Penalties. There are penalties for filing your return late

and for paying the tax late. If you pay your taxes late,

you will also be charged interest on the amount you

owe.

Putting Your Return Together

After you have received all your wage and other income

statements, and have the correct tax form and instructions, you are ready to complete your return. Because you most likely can use Form 1040EZ, completing Form 1040EZ is discussed here.

Form 1040EZ is only 12 lines long on the front of a

single page. The booklet, 2000 Form 1040EZ Instructions, contains instructions for each line. An example of a filled-in Form 1040EZ is at the back of this

publication.

Fill in your name, address, and social security number. Or, if you have an IRS label, attach it instead.

Make sure you enter your social security number. Enter

Page 9
your total income for the year (from your Forms W–2

and 1099–INT, for example). From that adjusted gross

income amount you subtract the amount of your

standard deduction and your personal exemption if you

can claim one. Then you find the tax on the remaining

amount (taxable income) in the Tax Table in the instructions booklet. 

Compare the amount of tax shown in the table to the

amount of your payments, including the tax your employer withheld. You can find the amount of tax withheld in box 2 of Form W–2. If any tax was withheld from

your interest income, you can find that amount in box

4 of Form 1099–INT.

If your payments are more than your tax, the difference between the two amounts is your refund. If your

tax is more than your payments, the difference is what

you owe. If you owe tax, you must send a check or

money order for the amount due with your return. You

may also pay by credit card. For more information, get

the Form 1040EZ, 1040A, or 1040 instructions booklet.

Attach a copy of all your Forms W–2 to your return.

Do not attach Forms 1099–INT, but keep them for your

records. Make a copy of your return before you mail

it. Keep it in a safe place with the other copies of your

Forms W–2 and your Forms 1099–INT.

Alternative Filing Methods

The IRS offers several filing alternatives to make filing

your return easier. This section explains IRS e-file

(electronic filing).

• Using a tax professional.

• Using your personal computer.

• Using a telephone (TeleFile).

IRS e-file

IRS e-file uses automation to replace most of the

manual steps needed to process your paper returns.

As a result, processing e-file returns is faster and more

accurate than the processing of paper returns. Taxpayers who file electronically and choose direct deposit

receive their refunds in less than half the time that paper filers do.

Using a tax professional. Many tax professionals file

returns electronically for their clients. You can prepare

your own return and have a professional electronically

transmit it, or you can have your return prepared and

transmitted by a tax professional. 

Using your personal computer. If you have a computer and tax preparation software, you can e-file your

return electronically from home 24 hours a day, 7 days

a week. 

Using the telephone (TeleFile). If you receive a

TeleFile tax package, you may be able to file your Form

1040EZ information over the phone. You can use

TeleFile only if you receive the package. You cannot

order it.

More information. For more information on IRS e-file,

call TeleTax and listen to topic 252. The TeleTax

number for your area is listed in your tax forms package.

What Tax Records

Should I Keep?

You should make and keep a copy of your completed

tax return.

RECORDS

Keep Copy C of all Forms W–2, your Forms

1099 showing interest and other income, and a

record of any other information you filed with

your return. Keep these records for at least 3 years from

the date your return was due or filed, or 2 years from

the date you paid the tax, whichever is later. For more

information, get Publication 552, Recordkeeping for Individuals.

When Will I

Get My Refund?

Refund information is not available until at least 4

weeks after you file your return (3 weeks if you file

electronically), and sometimes not available for up to 6

weeks. If you have not received your refund within 4

weeks after filing your return, you can call TeleTax. The

TeleTax number is listed in your tax forms package.

Be sure to have your social security number, your filing

status, and the exact whole-dollar amount of your refund when you call.

Sample Tax Forms

Preparing the various tax forms may look difficult but

really is not. If you follow the forms line by line and refer

to the instructions when necessary, you should be able

to complete the forms easily. On the next few pages

are examples of Form W–4, Form 1040EZ, and

Schedule C–EZ that you can use as a guide. And don't

forget, if you have any questions, you can contact the

IRS.

Form W–4

Rachel Smith is 19 years old and a sophomore at City

College. Her parents pay most of her college costs,

including living expenses, and claim her as a dependent

on their tax return. In 2001, Rachel has a job as a

cashier at the ABC Department Store.

Rachel estimates that she will earn about $1,220

during the school year and about $3,420 during the

summer. Also, she usually earns about $50 a year in

interest on checking and savings accounts at a local

bank. Her total income will be about $4,690.

On Rachel's first day of work, her boss gives her

Form W–4 to fill in. Her completed Form W–4 is shown

later.

Rachel begins by reading the information and instructions above the Form W–4 certificate. She reads

the information under “Exemption from Withholding”

and the statement on line 7 of Form W–4. She had a

right to a refund of all federal income tax withheld in

Page 10
2000 because she had no tax liability. But she expects

to have a tax liability for 2001 because her earned income will be more than $4,550, and her parents can

claim her as a dependent. Rachel cannot claim exemption from withholding.

Personal allowances worksheet. Because Rachel is

not exempt from withholding, she completes the Personal Allowances Worksheet on page 1 of Form W–4.

Line A. Because her parents can claim her as a

dependent, Rachel cannot claim an allowance for herself. So she leaves line A blank.

Line B. Because she is single and has only one job,

she can enter “1” on line B.

Lines C-G. Rachel leaves lines C and D blank because she has no spouse or dependents. She reads

the information under “Head of Household” in the instructions at the top of the form. Rachel realizes that

she cannot claim head of household filing status, so she

also leaves line E blank. She leaves lines F and G

blank because she has no children.

Line H. She adds lines A through G and enters the

total of her allowances (1) in the entry space for line

H.

Rachel reads the bulleted items under line H and

finds that neither the first nor the second items apply

to her. Following the instruction for the third bulleted

item, she enters the “1” from line H of the worksheet

on line 5 of the form.

Form W–4. She fills in the identifying information at the

top of the form and checks the “Single” box in item 3.

Rachel leaves line 6 blank because she does not want

any additional amount (beyond what claiming “1” allowance will provide) withheld from her wages.

Because she cannot claim exemption from withholding, she leaves line 7 blank.

Rachel signs and dates the form at the bottom.

Boxes 8, 9, and 10 are left blank. These are for her

employer's use, if needed.

Form 1040EZ

Pat Brown is single and has no dependents. She is 22

years old and a full-time student at State University.

She has a scholarship that covers her tuition and $500

of her room and board each year. Her parents are able

to claim her as a dependent.

In 2000, Pat worked in the community library during

the summer. Her Form W–2 (not illustrated) shows she

earned $2,250 in wages and had $150 in federal income tax withheld during 2000. She also received a

Form 1099–INT showing she had $277 in interest income. She files Form 1040EZ as explained below. Her

completed Form 1040EZ is shown later.

Name and Address

Pat picked up a Form 1040EZ instructions booklet at

the local post office. She followed the instructions and

wrote her name, address, and social security number

as reported on her social security card, in the space

provided on the top of the Form 1040EZ. When she

finished she checked again to make sure everything

was written as the instructions requested.

Presidential Election Campaign Fund. Pat wants $3

of her taxes to go to this fund, so she checks the

“Yes” box. Checking “Yes” will not change her tax or

reduce her refund.

Income

Pat has two items of income that must be combined

and the total entered on line 1 of Form 1040EZ. The

part of her scholarship that is for room and board ($500)

is taxable. She adds this amount to the wages ($2,250)

shown in box 1 of her Form W–2. She enters the total

(2,750.00) on line 1. In the space to the right of “W–2

form(s),” she writes “SCH $500.” On line 2, she enters

her interest income of 277.00. She adds her wages,

taxable scholarship, and interest together to figure her

adjusted gross income of $3,027. She enters 3,027.00

on line 4.

Standard Deduction

and Personal Exemption

Because Pat can be claimed as a dependent by her

parents, she checks the “Yes” box on line 5. She uses

the worksheet on the back of her Form 1040EZ to figure

the amount to enter on line 5. The information from her

completed worksheet is shown below.

Pat enters 3,000.00 on line 5.

Note. If she could not be claimed as a dependent

by her parents or someone else, she would have had

a standard deduction amount of $4,400 and a personal

exemption of $2,800. In that case, she would have

checked the “No” box and entered $7,200 on line 5.

Payments and Tax

Pat subtracts line 5 (3,000.00) from line 4 (3,027.00)

and enters the result of 27.00 on line 6. This amount is

her taxable income. She will figure her income tax on

this amount.

Pat had $150 of federal income tax withheld from her

wages by her employer. She found this amount in box

2 of her Form W–2. She enters this amount on line 7

of Form 1040EZ.

Because she is under age 25 and her parents can

claim her as a dependent, Pat is not eligible for the

earned income credit. She prints “No” in the space to

the right of the word “below” on line 8.

If she wanted the IRS to compute her tax for her, she

would stop at this point. She would make sure that lines

1 through 8 were completed accurately, then sign and

date the return and enter her occupation.

Pat decides to compute her tax by herself. She adds

the amounts on lines 7 and 8 and enters her total payments (150.00) on line 9.

A. Amount, if any, from line 1 on the front $2,750

 plus $250 Enter total > A. $3,000

B. Minimum standard deduction. B. $700

C. Enter the larger of line A or line B here. C. $3,000

D. Maximum standard deduction. If single, enter $4,400; if married,

enter $7,350. D. $4,400

E. Enter the smaller of line C or line D here. This is your standard

deduction. E. $3,000

F. Exemption amount.

• If single, enter 0.

• If married and both you and your spouse can be claimed as

dependents, enter 0.

• If married and only one of you can be claimed as a dependent,

enter $2,800. F. -0-

G. Add lines E and F. Enter the total here and on line 5 on the front. G. $3,000

Page 11
She goes to the Tax Table in the instructions and

reads down the income column until she finds the line

that includes $27, her taxable income shown on line 6

of her Form 1040EZ. She then reads across the line

to the tax column for single persons to find her tax ($6).

She enters 6.00 on line 10 of her Form 1040EZ.

Refund or Amount You Owe

Pat compares line 9 and line 10. Because line 9 is

larger, she subtracts line 10 (6.00) from line 9 (150.00)

to arrive at her refund of 144.00. She enters this amount

on line 11a. She does not want to have her refund deposited directly into her bank account; therefore she

leaves lines 11b, 11c, and 11d blank. She also leaves

line 12 blank. She will receive a tax refund of $144.

Note. If her employer had not withheld any federal

income tax from her wages, Pat would have owed $6

in income tax. She would have left line 11a blank and

entered that amount on line 12. She would then have

enclosed in the envelope with her return a check or

money order for the full amount of $6 payable to “United

States Treasury.” She would have written on the front

of her check or money order:

• “2000 Form 1040EZ,”

• Her name, 

• Her address, 

• Her daytime telephone number, and

• Her social security number.

Sign Your Return

Pat checks her return to make sure that she entered the

numbers clearly and correctly and that her math is

correct. 

Pat enters her occupation (student) and signs and

dates her return at the bottom of the form. She makes

a copy of her filled-in tax return for her records. She

attaches a copy of her Form W–2 where indicated on

the front of her return. Then she mails her return to the

appropriate Internal Revenue Service Center as indicated on the back of the instructions.

Schedule C–EZ

Stephen Burke is a high school student. During the

summer of 2000, he mowed lawns for some of his

neighbors. He used his father's lawn mower and paid

for gas and oil used in his business.

Stephen kept good records that showed he earned

$750, including tips, and spent $40 on gas and oil.

Because his income minus business expenses is at

least $400, he must file Form 1040 and either Schedule

C or Schedule C–EZ, even if this was his only income.

Because his net earnings from self-employment are at

least $400, Stephen must also complete Schedule SE

to compute his self-employment tax. Form 1040 and

Schedule SE are not shown here. Stephen chooses to

file Schedule C–EZ. He enters his name and social

security number at the top of the schedule. He then fills

in the required information in Parts I and II. (Stephen's

filled-in Schedule C–EZ is shown at the end of this

publication.)

Part II, line 1. This is where income is reported. All the

money he received ($750) is shown on line 1.

Part II, line 2. This is where expenses are reported.

He lists the $40 for gas and oil on line 2.

Part II, line 3. This shows the net profit from the

business that is subject to tax. Stephen must include

$710 on Form 1040, line 12.

How To Get Tax Help

You can get help with unresolved tax issues, order free

publications and forms, ask tax questions, and get more

information from the IRS in several ways. By selecting

the method that is best for you, you will have quick and

easy access to tax help.

Contacting your Taxpayer Advocate. If you have

attempted to deal with an IRS problem unsuccessfully,

you should contact your Taxpayer Advocate.

The Taxpayer Advocate represents your interests

and concerns within the IRS by protecting your rights

and resolving problems that have not been fixed

through normal channels. While Taxpayer Advocates

cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from

previous contacts and ensure that your case is given

a complete and impartial review.

To contact your Taxpayer Advocate:

• Call the Taxpayer Advocate at 1–877–777–4778.

• Call the IRS at 1–800–829–1040.

• Call, write, or fax the Taxpayer Advocate office in

your area.

• Call 1–800–829–4059 if you are a TTY/TDD user.

For more information, see Publication 1546, The

Taxpayer Advocate Service of the IRS.

Free tax services. To find out what services are

available, get Publication 910, Guide to Free Tax Services. It contains a list of free tax publications and an

index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics.

Personal computer. With your personal computer and modem, you can access the IRS on

the Internet at www.irs.gov. While visiting our

web site, you can select:

• Frequently Asked Tax Questions (located under

Taxpayer Help & Ed) to find answers to questions

you may have.

• Forms & Pubs to download forms and publications

or search for forms and publications by topic or

keyword.

• Fill-in Forms (located under Forms & Pubs) to enter

information while the form is displayed and then

print the completed form.

• Tax Info For You to view Internal Revenue Bulletins

published in the last few years.

Page 12
• Tax Regs in English to search regulations and the

Internal Revenue Code (under United States Code

(USC)).

• Digital Dispatch and IRS Local News Net (both located under Tax Info For Business) to receive our

electronic newsletters on hot tax issues and news.

• Small Business Corner (located under Tax Info For

Business) to get information on starting and operating a small business.

You can also reach us with your computer using File

Transfer Protocol at ftp.irs.gov.

TaxFax Service. Using the phone attached to

your fax machine, you can receive forms and

instructions by calling 703–368–9694. Follow

the directions from the prompts. When you order forms,

enter the catalog number for the form you need. The

items you request will be faxed to you.

Phone. Many services are available by phone.

• Ordering forms, instructions, and publications. Call 

1–800–829–3676 to order current and prior year

forms, instructions, and publications.

• Asking tax questions. Call the IRS with your tax

questions at 1–800–829–1040.

• TTY/TDD equipment. If you have access to

TTY/TDD equipment, call 1–800–829–4059 to ask

tax questions or to order forms and publications.

• TeleTax topics. Call 1–800–829–4477 to listen to

pre-recorded messages covering various tax topics.

Evaluating the quality of our telephone services.

To ensure that IRS representatives give accurate,

courteous, and professional answers, we evaluate the

quality of our telephone services in several ways.

• A second IRS representative sometimes monitors

live telephone calls. That person only evaluates the

IRS assistor and does not keep a record of any

taxpayer's name or tax identification number.

• We sometimes record telephone calls to evaluate

IRS assistors objectively. We hold these recordings

no longer than one week and use them only to

measure the quality of assistance.

• We value our customers' opinions. Throughout this

year, we will be surveying our customers for their

opinions on our service.

Walk-in. You can walk in to many post offices,

libraries, and IRS offices to pick up certain

forms, instructions, and publications. Also,

some libraries and IRS offices have:

• An extensive collection of products available to print

from a CD-ROM or photocopy from reproducible

proofs.

• The Internal Revenue Code, regulations, Internal

Revenue Bulletins, and Cumulative Bulletins available for research purposes.

Mail. You can send your order for forms, instructions, and publications to the Distribution

Center nearest to you and receive a response

within 10 workdays after your request is received. Find

the address that applies to your part of the country.

• Western part of U.S.:

Western Area Distribution Center

Rancho Cordova, CA 95743–0001

• Central part of U.S.:

Central Area Distribution Center

P.O. Box 8903

Bloomington, IL 61702–8903

• Eastern part of U.S. and foreign addresses:

Eastern Area Distribution Center

P.O. Box 85074

Richmond, VA 23261–5074

CD-ROM. You can order IRS Publication 1796,

Federal Tax Products on CD-ROM, and obtain:

• Current tax forms, instructions, and publications.

• Prior-year tax forms, instructions, and publications.

• Popular tax forms which may be filled in electronically, printed out for submission, and saved for

recordkeeping.

• Internal Revenue Bulletins.

The CD-ROM can be purchased from National

Technical Information Service (NTIS) by calling

1–877–233–6767 or on the Internet at

www.irs.gov/cdorders. The first release is available in

mid-December and the final release is available in late

January.

IRS Publication 3207, The Business Resource

Guide, is an interactive CD-ROM that contains information important to small businesses. It is available in

mid-February. You can get one free copy by calling

1–800–829–3676.

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1

1

Rachel S. 123 00 9876

2026 Elk Grove Rd.



Anytown, CO 80000

1

Rachel S. Smith March 12 2001

Form W-4 (2001)

Purpose. Complete Form W-4 so your employer

can withhold the correct Federal income tax

from your pay. Because your tax situation may

change, you may want to refigure your withholding each year.

Head of household. Generally, you may claim

head of household filing status on your tax

return only if you are unmarried and pay more

than 50% of the costs of keeping up a home for

yourself and your dependent(s) or other qualifying individuals. See line E below.

Exemption from withholding. If you are

exempt, complete only lines 1, 2, 3, 4, and 7,

and sign the form to validate it. Your exemption

for 2001 expires February 18, 2002. Check your withholding. After your Form W-4

takes effect, use Pub. 919 to see how the dollar

amount you are having withheld compares to

your projected total tax for 2001. Get Pub. 919

especially if you used the Two-Earner/Two-Job

Worksheet on page 2 and your earnings exceed $150,000 (Single) or $200,000 (Married). Basic instructions. If you are not exempt, complete the Personal Allowances Worksheet

below. The worksheets on page 2 adjust your

withholding allowances based on itemized

deductions, certain credits, adjustments to

Two earners/two jobs. If you have a working

spouse or more than one job, figure the total

number of allowances you are entitled to claim

on all jobs using worksheets from only one Form

W-4. Your withholding usually will be most accurate when all allowances are claimed on the

Form W-4 for the highest paying job and zero

allowances are claimed on the others.

Personal Allowances Worksheet (Keep for your records.)

A Enter “1” for yourself if no one else can claim you as a dependent A

● You are single and have only one job; or

B Enter “1” if: ● You are married, have only one job, and your spouse does not work; or B

● Your wages from a second job or your spouse’s wages (or the total of both) are $1,000 or less.  

Enter “1” for your spouse. But, you may choose to enter -0- if you are married and have either a working spouse or

more than one job. (Entering -0- may help you avoid having too little tax withheld.)

C

C

D Enter number of dependents (other than your spouse or yourself) you will claim on your tax return D

E E

F F

H Add lines A through G and enter total here. (Note: This may be different from the number of exemptions you claim on your tax return.)  H

● If you plan to itemize or claim adjustments to income and want to reduce your withholding, see the Deductions

and Adjustments Worksheet on page 2. For accuracy,

complete all

worksheets

that apply.

● If you are single, have more than one job and your combined earnings from all jobs exceed $35,000, or if you

are married and have a working spouse or more than one job and the combined earnings from all jobs exceed

$60,000, see the Two-Earner/Two-Job Worksheet on page 2 to avoid having too little tax withheld.

● If neither of the above situations applies, stop here and enter the number from line H on line 5 of Form W-4 below. 

Cut here and give Form W-4 to your employer. Keep the top part for your records.

OMB No. 1545-0010

Form W-4 Employee’s Withholding Allowance Certificate

Department of the Treasury

Internal Revenue Service  For Privacy Act and Paperwork Reduction Act Notice, see page 2.

1 Type or print your first name and middle initial Last name 2 Your social security number

Home address (number and street or rural route) 3 Single Married Married, but withhold at higher Single rate.

City or town, state, and ZIP code

Note: If married, but legally separated, or spouse is a nonresident alien, check the Single box.

5 Total number of allowances you are claiming (from line H above or from the applicable worksheet on page 2) 5

6 Additional amount, if any, you want withheld from each paycheck 6 $

7 I claim exemption from withholding for 2001, and I certify that I meet both of the following conditions for exemption:

● Last year I had a right to a refund of all Federal income tax withheld because I had no tax liability and

● This year I expect a refund of all Federal income tax withheld because I expect to have no tax liability.

If you meet both conditions, write “Exempt” here  7

8

Under penalties of perjury, I certify that I am entitled to the number of withholding allowances claimed on this certificate, or I am entitled to claim exempt status.

Employee’s signature

(Form is not valid

unless you sign it.)  Date 

Employer’s name and address (Employer: Complete lines 8 and 10 only if sending to the IRS.) Office code 9 Employer identification number

(optional)

10

Enter “1” if you have at least $1,500 of child or dependent care expenses for which you plan to claim a credit

4 If your last name differs from that on your social security card,

check here. You must call 1-800-772-1213 for a new card 

Cat. No. 10220Q

Enter “1” if you will file as head of household on your tax return (see conditions under Head of household above)

Note: You cannot claim exemption from withholding if (1) your income exceeds $750 and includes

more than $250 of unearned income (e.g., interest and dividends) and (2) another person can

claim you as a dependent on their tax return.

Nonwage income. If you have a large amount of

nonwage income, such as interest or dividends,

Recent name change? If your name on line 1 differs from that shown on your social security card,

call 1-800-772-1213 for a new social security card.

G Child Tax Credit (including additional child tax credit):

G

● If your total income will be between $50,000 and $80,000 ($63,000 and $115,000 if married), enter “1” if you have two

eligible children, enter “2” if you have three or four eligible children, or enter “3” if you have five or more eligible children.

● If your total income will be between $18,000 and $50,000 ($23,000 and $63,000 if married), enter “1” for each eligible child.

2001

(Note: Do not include child support payments. See Pub. 503, Child and Dependent Care Expenses, for details.)

Tax credits. You can take projected tax credits

into account in figuring your allowable number of

withholding allowances. Credits for child or

dependent care expenses and the child tax

credit may be claimed using the Personal

Allowances Worksheet below. See Pub. 919,

How Do I Adjust My Tax Withholding? for information on converting your other credits into

withholding allowances.

income, or two-earner/two-job situations. Complete all worksheets that apply. They will help

you figure the number of withholding allowances

you are entitled to claim. However, you may

claim fewer (or zero) allowances.

consider making estimated tax payments using

Form 1040-ES, Estimated Tax for Individuals.

Otherwise, you may owe additional tax.

Smith

Page 14
Do you, or spouse if a joint return, want $3 to go to this fund?

Taxable interest. If the total is over $400, you cannot use

Form 1040EZ.

Department of the Treasury—Internal Revenue Service

Form Income Tax Return for Single and 1040EZ Joint Filers With No Dependents 2000 OMB No. 1545-0675

Spouse’s social security number

Yes No Presidential Note. Checking “Yes” will not change your tax or reduce your refund.

Campaign (p. 12) Dollars Cents

Total wages, salaries, and tips. This

should be shown in box 1 of your

W-2 form(s). Attach your W-2 form(s).

1

Attach 1 , . Form(s)

W-2 here.

Enclose, but

do not attach,

any payment.

2

2

Add lines 1, 2, and 3. This is your adjusted gross

income.

5 Can your parents (or someone else) claim you on their return? Note. You

must check

Yes or No.

Yes. No.

5 , .

Subtract line 5 from line 4. If line 5 is larger than

line 4, enter 0. This is your taxable income. 

6

6 , .

Payments

and tax

Earned income credit (EIC). See page 15.

7

7 , .

Tax. Use the amount on line 6 above to find your tax

in the tax table on pages 24–28 of the booklet. Then,

enter the tax from the table on this line.

10

10 , .

Refund If line 9 is larger than line 10, subtract line 10 from

line 9. This is your refund.

11a

11a .

If line 10 is larger than line 9, subtract line 9 from line

10. This is the amount you owe. See page 21 for

details on how to pay. . I have read this return. Under penalties of perjury, I declare that to the best of my knowledge and belief, the

return is true, correct, and accurately lists all amounts and sources of income I received during the tax year.

Sign

here

Keep copy for

your records.

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 23.

Income

,

,

.

, .

Cat. No. 11329W



4

4

12

12

Your social security number

Add lines 7 and 8a. These are your total payments.

8a

8a . 9 9 , .

Enter your Federal income tax withheld from box 2 of

your W-2 form(s).

Type $

Unemployment compensation, qualified state tuition

program earnings, and Alaska Permanent Fund

dividends (see page 14).

3

3

, .

Use

the

IRS

label

here

Your first name and initial

Home address (number and street). If you have a P.O. box, see page 12. Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, see page 12.

If a joint return, spouse’s first name and initial

Last name

Last name

Amount

you owe

b Routing number

Account

number

c Type:

Checking Savings



Enter amount

from worksheet

on back.

If single, enter 7,200.00.

If married, enter 12,950.00.

See back for explanation.

Your signature

Date Your occupation

Spouse’s signature if joint return. See page 11.

Date Spouse’s occupation

Have it

directly

deposited! See

page 20 and

fill in 11b,

11c, and 11d.

d

Yes No



1 2 3 4 5

6 7 8 9 10





b Nontaxable earned income: enter type and amount below.

2000 Form 1040EZ

For

Official

Use

Only



You Spouse

May the IRS discuss this return with the preparer shown on back (see page 21)? Yes No

 

SCH $500



2/14/01 student

2 7 50 00

277

3 027

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

3 000

2 7

1 50

1 50

6

4 4

No

Pat A. Brown

1 00 8765 2 3

1

PAT A. BROWN

2483 COTTAGE RD

ANYTOWN, AZ 85000-0000

Page 15
SCHEDULE C-EZ OMB No. 1545-0074

(Form 1040) Net Profit From Business

(Sole Proprietorship)

 Partnerships, joint ventures, etc., must file Form 1065 or 1065-B. Department of the Treasury

Internal Revenue Service

Attachment

 Attach to Form 1040 or Form 1041.  See instructions on back. Sequence No. 09A

Business name. If no separate business name, leave blank. D Employer ID number (EIN), if any

Business address (including suite or room no.). Address not required if same as on Form 1040, page 1.

C

E

Gross receipts. Caution: If this income was reported to you on Form W-2 and the “Statutory

employee” box on that form was checked, see Statutory Employees in the instructions for

Schedule C, line 1, on page C-2 and check here  1

2 Total expenses. If more than $2,500, you must use Schedule C. See instructions 2

3

3 Net profit. Subtract line 2 from line 1. If less than zero, you must use Schedule C. Enter on

Form 1040, line 12, and also on Schedule SE, line 2. (Statutory employees do not report this

amount on Schedule SE, line 2. Estates and trusts, enter on Form 1041, line 3.)

For Paperwork Reduction Act Notice, see Form 1040 instructions. Cat. No. 14374D Schedule C-EZ (Form 1040) 2000

City, town or post office, state, and ZIP code

You May Use

Schedule C-EZ

Instead of

Schedule C

Only If You:

And You:

● Use the cash method of accounting.

● Had only one business as a sole

proprietor.

● Had business expenses of $2,500 or

less. ● Are not required to file Form 4562,

Depreciation and Amortization, for

this business. See the instructions

for Schedule C, line 13, on page

C-3 to find out if you must file.

● Do not deduct expenses for

business use of your home.

● Do not have prior year unallowed

passive activity losses from this

business.

 

Name of proprietor Social security number (SSN)

General Information

A Principal business or profession, including product or service B Enter code from pages C-7 & 8



Figure Your Net Profit

Part I

Part II

● Did not have a net loss from your

business.

● Had no employees during the year.

1

● Did not have an inventory at any

time during the year.

6 Do you (or your spouse) have another vehicle available for personal use? Yes No

8a Do you have evidence to support your deduction? Yes No

If “Yes,” is the evidence written? Yes No

7 Was your vehicle available for use during off-duty hours? Yes No

5 Of the total number of miles you drove your vehicle during 2000, enter the number of miles you used your vehicle for:

Business b Commuting c Other

4

Part III Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 2.

a

b

(99)

When did you place your vehicle in service for business purposes? (month, day, year)  . / /

2000

Stephen Burke 567 00 4321

mowing lawns 3 0

750 00

40 00

710 00

5 6 1 7

Page 16