© 2014 Cengage Learning. All Rights Reserved. Do Now: ●Are paying taxes a good thing or bad thing, in your opinion? ●Explain in detail, considering where

© 2014 Cengage Learning. All Rights Reserved.

Do Now:

● Are paying taxes a good thing or bad thing, in your opinion? ● Explain in detail, considering where they come

from and what purpose they serve

SLIDE 1


Last Class…

● Hang up definitions we recorded last class by taping papers around room

● Of the definitions we researched last class, which terms have significance when discussing what is subtracted from your paycheck?● Walk around the room to find as many terms as

possible and write them down so you can defend your reasoning

SLIDE 2


Payroll Taxes

● Federal income tax withheld from employee earnings in all 50 states● Must be sent periodically to respective government

agencies● Taxes based on the payroll of a business are called

payroll taxes.● Based on employee earnings● Government assesses penalties for failure to pay

correct payroll when due● Liability of employer until paid

SLIDE 3

Lesson 12-2

LO3


Employee’s Withholding Allowance Certificate

● A deduction from total earnings for each person legally supported by a taxpayer, including the employee, is called a withholding allowance.● W-4 helps determine how much income tax to

withhold from employee● All employers must have for all employees● Larger number of allowances claimed, smaller amount

of income tax withheld

SLIDE 4

LO3

Lesson 12-2



SLIDE 5

LO3

Lesson 12-2

Name and Address 1

Marital Status 3 Social Security Number 2

Withholding Allowances

4

Signature and Date

5


Split the Room

● Do you believe all individuals should have to pay taxes, regardless of their situation? ● Explain your answers in detail, as this is a great

topic for discussion

SLIDE 6



● Exemption allowed for low-income and part-time employees

● Individuals cannot claim exemption from withholding if:1. Income > $950.00 and includes >$300.00

unearned income2. Another person can claim them as dependent

SLIDE 7

LO3

Lesson 12-2



● Any amount withheld from an employee’s gross earnings is called a payroll deduction.● Retirement plan contributions, health care

premiums, and charitable donations also withheld● Federal income tax laws written and passed by

Congress● IRS administers tax laws

SLIDE 8

LO3

Lesson 12-2


Employee’s Income Tax Withholding—Single Persons

SLIDE 9

LO3

Lesson 12-2


Employee’s Income Tax Withholding—Married Persons

SLIDE 10

LO3

Lesson 12-2

Select the appropriate table 1

Locate employee’s total earnings

2

Intersection of earnings and withholding allowances 3


Give it a Try…

● Work Together 12-2, Federal Income Tax Withholding section only

SLIDE 11


Employee Social Security and Medicare Tax

● Federal Insurance Contributions Act (FICA) established federal program for old-age, survivors, disability, and hospital insurance

● A federal tax paid for old-age, survivors, and disability insurance is called social security tax.

SLIDE 12

LO4

Lesson 12-2



● A federal tax paid for hospital insurance is called Medicare tax.● Both taxes paid by employees and employers● Employers required to match taxes paid by

employees● Self-employed individual must pay both employee

and employer tax

SLIDE 13

LO4

Lesson 12-2



● Social security taxed on employee earnings up to maximum paid in given year

● The total gross earnings year to date for an employee is called accumulated earnings.

● The maximum amount of earnings on which a tax is calculated is called a tax base.● When accumulated earnings and tax base are

equal, no additional taxes need to be paid● Congress sets tax rates and tax base

SLIDE 14

LO4

Lesson 12-2


Calculations

Social Security Tax Calculation● Tax rate = 6.2%● Taxed on maximum of $106,800 in earningsTotal Earnings x Social Security Rate = Social Security Tax Deduction

Medicare Tax Calculation● Tax rate = 1.45%● No maximum paymentTotal Earnings x Medicare Tax Rate = Medicare Tax Deduction

SLIDE 15

Finish Work Together 12-2


Closure

● How is Social Security considered a Ponzi Scheme?

SLIDE 16

Documents

© 2014 Cengage Learning. All Rights Reserved. Do Now: ●Are paying taxes a good thing or bad thing, in your opinion? ●Explain in detail, considering where