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Introduction to Business & Marketing. Consumer Taxation. Learning Objectives. Understand taxes and payroll deductions Identify the major types of consumer taxation. Compute gross and net pay. Complete personal income tax forms. What are taxes. - PowerPoint PPT Presentation
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CONSUMER TAXATIONIntroduction to Business & Marketing
LEARNING OBJECTIVES Understand taxes and payroll
deductions Identify the major types of
consumer taxation. Compute gross and net pay. Complete personal income tax
forms.
WHAT ARE TAXES
A sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.
TYPES OF CONSUMER TAXATION
PERSONAL PROPERTY TAX State mandated tax requiring the
owner to pay a percentage on the value of their property Homes Cars Recreational Vehicles
Main tax supporting public education, emergency services, and local government
INCOME TAX
Requires workers to pay a percentage of their earned income
Imposed by the federal government and by most state & local governments
Amount paid depends on your tax bracket
SALES TAX Consumption tax
charged at the point of purchase for certain goods & services
Each state or jurisdiction can set its own sales tax percentage
SALES TAX EXAMPLES
Virginia – 5%
Tennessee – 9%
Oregon – 0%
Delaware – 0%
California – 11%
FICA Federal Insurance Contribution
Act
Payroll deductions paid by individuals Social Security - 12.4% Medicare – 2.9%
If you are a wage or salary employee your employer pays half
Self employed – you pay all
UNDERSTANDING YOUR PAYCHECK
WHEN YOU GET PAID… Gross Pay: wages & salary Deductions : federal taxes,
state taxes, FICA, and other optional deductions Optional deductions include
things like health insurance, retirement, etc.
Net Pay: take-home pay Calculated by subtracting
deductions from gross pay
IN YOUR NOTES Look over the paystub provided. Circle & label the employee’s gross pay. Draw a rectangle around all the deductions for
this paycheck. Circle the employee’s net pay for this paycheck. How much did the employee pay in taxes? What percentage of the employee’s gross pay
went toward taxes?
INCOME FORMS
FORM W-4 Completed every time you
start a new job Determines how much you
will pay in taxes each paycheck
If you claim zero, the highest amount of taxes will be withheld from your paycheck.
FORM W-2
Federal tax form issued by employers that states how much an employee was paid in a given year
Used to complete tax return
Real World BusinessChicago, IL 60640
Irma Money2301 South JacksonChicago, IL 60640
000-00-000
16,680.2416,680.24
1034.16
1,728.00
241.9216,680.24
IL
12-2222222
16,680.24
440.40
12-2222222
D 2000.00
Real World BusinessChicago, IL 60640
Irma Money2301 South JacksonChicago, IL 60640
16,680.2416,680.24
1034.16
1,728.00
241.9216,680.24
IL
12-2222222 16,680.2
4440.40
12-2222222
D 2000
FORMS FOR FILING TAXES
TAX FORMS
1040 EZ 1040AUse this form if… Income is less than
$100,000 Filing as single or
married Under age of 65 No dependents
Use this form if…Income is less
than $100,000Claiming
adjustments for student loan interest
MORE TAX FORMS
1040 1099Use this form
if… Income exceeds
or equals $100,000
Self-employed
Used to report taxable income, such as interest, dividends, stock sales, etc.
WAYS TO FILE YOUR TAXES
FILING YOUR TAX RETURN In the past, you would prepare your taxes
and send your complete package in to the Internal Revenue Service (IRS)
Most people now use TurboTax, or another online tax service, to prepare their taxes and then e-file online with the IRS
You can also hire an accountant
TAX FORM ACTIVITY
http://apps.irs.gov/app/understandingTaxes/student/simulations.jsp
Go to the link provided and complete the simulations listed below Simulation 1 – Lawrence Red Owl Simulation 2 – Cicely King Simulation 3 – Tasha Miller Simulation 7A – Monica Lindo