7/23/2019 Income, Benefits, And Taxes (Chapter 2)
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Income, Benefits, and Taxes
Chapter 2
7/23/2019 Income, Benefits, And Taxes (Chapter 2)
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Benefits
Offerings by an employer beyond pay
Examples include: Health insurance
401k plan
ension plan
!ick lea"e
ersonal #ea"e aid "acation
$iscounts
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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
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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/
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Sick Leave
ime off of (ork due to an illness
%ot scheduled
ay reuire a dr3s note
aid
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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/
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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
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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
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Salary
7 set income
,i"en in terms of an )annual salary*
%ot sub8ect to o"ertime pay
+sually accompanied by other benefits
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!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
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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/
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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
7/23/2019 Income, Benefits, And Taxes (Chapter 2)
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$%&&
7 tax form sho(ing income that has not hadincome tax (ithheld from it
?ecei"ed by independent contractors for the
(ork they ha"e performed
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I&
ax form filled out at time of hire
'ou (ill fill one out at each 8ob you hold
ro"es that you are legally allo(ed to (ork in
the +3!3 'ou must sho( 9$ from an established list of
appro"ed documents to pro"e you are (ho
you say you are
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$%#%'(
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
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)nearned Income
9ncome earned %O through (ork
Examples: Dank interest
$i"idend income
9f you ha"e any of this you (ill recei"e a taxstatement from the institution (here you
earned it at the same time as you recei"eyour &2
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Interest
oney earned on money you ha"e in"ested 9nterest earned on money you ha"e in the
bank
his is considered )unearned income* for taxpurposes and must be reported on your taxreturn 9n other (ords you pay taxes on it
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Worker s !om*ensation
oney paid to you if you are in8ured (hile at(ork and are subseuently out of (ork
F0G of your salary
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+ross Pay
ay before any deductions are taken out
7/23/2019 Income, Benefits, And Taxes (Chapter 2)
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eduction
7ny money taken out of your paycheck
Examples include: 9ncome tax
!ocial !ecurity tax edicare tax
Health insurance premiums
+nemployment ins3
401k contributions <
<
<
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-et Pay
he amount of money you take home 7>E?all deductions are taken
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is*osa.le Income
oney left to spend or sa"e 7>E? taxesha"e been paid
%et pay
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iscretionary Income
oney left after all %EE$! are met %eeds food. shelter. etc3
!pent on luxury items
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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
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'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
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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
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'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
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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
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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