Income, Benefits, And Taxes (Chapter 2)

7/23/2019 Income, Benefits, And Taxes (Chapter 2)

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Income, Benefits, and Taxes

Chapter 2



Benefits

Offerings by an employer beyond pay

Examples include: Health insurance

401k plan

ension plan

!ick lea"e

ersonal #ea"e aid "acation

$iscounts



Health Insurance

Helps pay the cost of your healthcare %O&

'our portion that is deducted from your pay iskno(n as your )remium*

+sually you pay part and your employer payspart

Cheaper to get health insurance through an

employer than on your o(n



Paid Vacation

!cheduled time off that you still get paid for

,enerally you get an allo(ance of )"acationtime* each year -1 (eek. 2 (eeks. etc/



Sick Leave

ime off of (ork due to an illness

%ot scheduled

ay reuire a dr3s note

aid



Personal Leave

aid time a(ay from (ork for )personal*reasons

ypically not scheduled

ypically gi"en an allo(ance of )personaltime* each year -5 days. 6 days. etc/



Hourly Wage

he amount of money you make per hour

&hen you are an )hourly employee* you areentitled to o"ertime pay

&hen you are an )hourly employee* you onlyget paid for the hours you (ork



vertime Pay

1 and a half times your hourly rate

aid at this rate for any and all hours abo"e40 hrs in a (eek



Salary

7 set income

,i"en in terms of an )annual salary*

%ot sub8ect to o"ertime pay

+sually accompanied by other benefits



!ommission

9ncome based on a percentage of your salesas a salesperson

+sually goes (ith a lo( hourly rate or a lo(

salary Ex: car sales. real estate agents



W"

7 summary statement of your income and taxpayments in a calendar year

ust be mailed to you by your employer by

anuary 51st each year $oes not sho( all deductions you paid

throughout the year

Only sho(s;;<<< 'ou (ill recei"e one from each 8ob (orked

an=$ec -e"en if you only (orked 1 day/



W#

>illed out by you -the employee/

>illed out at the time of hire

9ndicates to your employer ho( much should

be (ithheld in taxes Can be updated by you at any time



$%&&

7 tax form sho(ing income that has not hadincome tax (ithheld from it

?ecei"ed by independent contractors for the

(ork they ha"e performed



I&

ax form filled out at time of hire

'ou (ill fill one out at each 8ob you hold

ro"es that you are legally allo(ed to (ork in

the +3!3 'ou must sho( 9$ from an established list of

appro"ed documents to pro"e you are (ho

you say you are



$%#%'(

he easiest of the 1040 forms 7ll (orkers (ho earn o"er @10000 in a

calendar year +! file a 1040 form

1040eA 1040a 1040

EB form is for those (ith !9#E tax

situations #ess than 100.000year %o deductions



)nearned Income

9ncome earned %O through (ork

Examples: Dank interest

$i"idend income

9f you ha"e any of this you (ill recei"e a taxstatement from the institution (here you

earned it at the same time as you recei"eyour &2



Interest

oney earned on money you ha"e in"ested 9nterest earned on money you ha"e in the

bank

his is considered )unearned income* for taxpurposes and must be reported on your taxreturn 9n other (ords you pay taxes on it



Worker s !om*ensation

oney paid to you if you are in8ured (hile at(ork and are subseuently out of (ork

F0G of your salary



+ross Pay

ay before any deductions are taken out



eduction

7ny money taken out of your paycheck

Examples include: 9ncome tax

!ocial !ecurity tax edicare tax

Health insurance premiums

+nemployment ins3

401k contributions <

<

<



-et Pay

he amount of money you take home 7>E?all deductions are taken



is*osa.le Income

oney left to spend or sa"e 7>E? taxesha"e been paid

%et pay



iscretionary Income

oney left after all %EE$! are met %eeds food. shelter. etc3

!pent on luxury items



Pro*erty Tax

ax paid on property -real estate/ you o(n

Digger house or piece of property largerproperty tax expense

+sually paid as part of your mortgagepayment

&ill depend on (here you li"e as (ell



'xcise Tax

7 tax charged on a select group of specificproducts and ser"ices

Examples of products ( excise taxes:

obacco ,asoline

7lcohol

ypically )hidden* in the cost of the item +nlike a sales tax



Sales tax

7 percentage of the sales price of goods andser"ices

Iaries by state

9n % it is JG aid at the time of purchase to the seller (ho

passes it along to the state

%ot all items are sub8ect to sales tax Ex: clothes -not all states/. food -most/.

)capital impro"ements* to a home



'xem*tion

7 person that you claim as a dependant onyour tax return

Children are the most common exemption but

others may ualify if they )depend* on you foro"er 60G of their care Ex: disabled spouse or parent

E"eryone gets to claim themsel"es as an

exemption he O?E exemptions you ha"e the #E!!

tax that is (ithheld



Social Security Tax

ax paid through payroll deductions thatfunds !ocial !ecurity

!ocial !ecurity is a federal program that

pro"ides a monthly income to senior citiAens onthly amount is based on ho( much you

(orked and contributed and at (hat age youtake ad"antage of it

>ull retirement age is KJ Can get J0G of benefit at K2 or FK3JG at K6



Income Tax

ax paid on the income you earn

'ou pay a federal income tax as (ell as astate income tax -in % and most states/

!ome cities also assess a city income tax &ithheld by your employer from your pay

Documents

Income, Benefits, And Taxes (Chapter 2)