Slide 1
CHAPTERS 6-7TAXES AND YOUR PAYCHECK
LEARNING TARGETSStudents can .
Explain the purpose behind payroll and other taxes.Identify and
define the different types of payroll & other taxes. Understand
the terminology associated with taxes. Recognize the different tax
forms. Identify the information on a W-2 form.Evaluate my personal
records to ensure I am paying enough in taxes.Prepare a 1040EZ tax
form.Prepare a W-4 form.
PAYROLL TAXESINCOME TAXFICA TAXFederal State LocalSocial
Security MedicareIn this world, nothing can be said to be certain,
except death and taxes. Benjamin FranklinPayroll taxes Taken out of
your pay and given to the govt. Income Taxes Taxes paid based on
your income and family situation. FICA Federal Insurance
Contributions Act; a law that requires you to pay for social
security and medicare benefits.You Asked For ItIn 1861, Abraham
Lincoln was responsible for Americas first income tax during the
Civil War.Under the 1861 law, people published their income in the
paper to keep them from lying.The law expired in 1872.Income Tax
Bill of 1913Part of the 16th Amendment of the Constitution.Allowed
Congress to tax your income, except for the first $3,000.Today, the
first $9,350 you make is tax free, so you dont need to file a
return if you made less than this.Withholding To deduct money from
your paycheck.YOUR PAYCHECK STUB pg. 120
Gross Income Amount you earn BEFORE taxes are taken out.Net
Income Amount you receive AFTER taxes. aka Take home pay
Steps To Filing Your Taxes
1) Fill out a W-4 form2) Receive W-2 from employer in Jan. of
the next year3) Fill out tax returns4) Pay any taxes you owe by
April 15
W-4 Form Required, by law, to fill out. Provides info. to
employer that helps them determine how much money to withhold from
your paycheck in taxes.
IRSInternal Revenue Service They may fine you if you havent paid
enough in taxes throughout the year.Allowances Reduce the amount of
money withheld from your pay. Found on W-4 form. 3 allowances
Tax Avoidance Its legal. Tax payers can avoid paying too much in
taxes by taking deductions from their home, student loans,
donations to charity and other expenses.
Tax Evasion Not paying your taxes, cheating on your tax return.
Illegal! Only the little people pay taxes. Leona Helmsley
The Queen of Mean was found guilty on 33 counts of tax evasion,
served 18 months in prison. Had to pay $1.2M in back taxes. Because
of her criminal record, she couldnt get a liquor license, so she
sold her hotel empire.
Read Global View pg. 125
From a financial point of view, is it a good idea to have extra
money withheld from your pay in order to save money?
Tax Return Forms that taxpayers fill out indicating how much
they made, how much they paid in taxes and whether they owe or get
a refund.
Who must file? Read page 151.
Single and made over $9,750 Teenagers who made over
$5,950Married and made over $19,500WHEN?File by April 15What is
considered income?
1) Wages2) Tips3) Interest earned on savings account4) Money
earned by doing odd jobs5) DividendsW-2 Form A form listing your
earnings and taxes withheld this past year. Employer must send it
to you by Jan. 31.
Form 1099-INT A statement from your bank showing interest paid
to you this past year. The bank sends a copy to the IRS.1040EZ The
easiest tax form to fill out. Example pg. 156.Who can use the
1040EZ?1) those with no children2) those under 653) earn less than
$50,000 a year4) earn less than $1500 in interest income
Social Security Number The govt. gives you this number as a way
to identify you.
Adjusted Gross Income All sources of income added together.
(wage, tips, salaries, dividends, interest etc.) Taxes and
Govt.
20% of all income in the U.S. goes to the federal govt.
Social Security Retirement moneyEmployer & employee pay into
this programLabeled FICA on pay stubMedicare Provides health
insurance during retirement
MedicareEmployer & employee pay into this programLabeled
FICA on pay stub
??Question??Whats the big deal about social security?Whats wrong
with Social Security?Why do they say I might not have it?Do I have
to pay for social security even if there is a chance I wont get to
collect it?
Types of TaxesIncome taxSales tax = taxes added to the price of
a good/service at time of purchase. 7.125%
What is NOT taxable?FoodClothingPrescription DrugsProperty taxes
= taxes on real estate
Excise tax = tax collected on the sale of specific
goods/services. EX: tobacco, gas, alcohol, firearms
Estate tax = tax on property given to you in the event of
someones death.
Gift tax = tax on gifts worth more than $10,000.
Sin tax = tax on goods that are harmful to your health. EX:
tobacco products
Cigarettes & TaxesAs of August 1st, 2011MN sales tax - $.36
per pack$.48 excise tax per pack$.75 health impact fee (tax??)
$1.59 in taxes per packTaxes & Vikings StadiumThe new
stadium will cost $975 million. $348 million is to be paid by the
State of MN through a tobacco tax.$1.60 per pack increaseSmoking
will NOT be allowed in the new stadium.Initially the state was
going to pay for it by installing these new betting games in bars,
but they havent been bringing in enough money.
Govt. Spending
Tax cuts encourage consumer spending! Why?
Charities The govt. allows you to deduct contributions from your
taxable income. What is the benefit in that?
https://www.youtube.com/watch?v=mg875497sww
