Ch.5 Taxes: How Much of Your Income Will You Keep?

5.1 Taxes and Your Paycheck5.2 File a Tax Return5.3 Taxes and Government5.4 Government and SpendingCh.5 Taxes: How Much of Your Income Will You Keep?15.1 Taxes and Your Paycheck5.1 Vocabulary WordsDirections: Write each word with the full definition. Then write a sentence using the vocabulary word. Payroll tax

Income tax

Federal Insurance Contributions Act (FICA)

Withholding -

25.1 Taxes and Your Paycheck5.1 Vocabulary WordsDirections: Write each word with the full definition. Then write a sentence using the vocabulary word. Payroll tax

Income tax

Federal Insurance Contributions Act (FICA)

Withholding -

35.1 Taxes and Your PaycheckPayroll TaxesAre placed on income earned by ________Amount based on individuals total earnings & tax laws that apply to type of incomePaid to government by individual employees and their ________________________Income taxes pay on most types of income you receive.Not a fixed ________________________Share varies, depending on each taxpayers financial & family situationIn 2008, ranged from 10 30%FICA law that requires workers and their employers to contribute to Social Security and ____________________________

WithholdingIncome withheld from paycheck goes to prepay federal income tax & social insurance _____________________Makes sure government collects taxes at steady rate & more likely people will pay taxesYour Paycheck StubShows gross income & withholdingGross Income

Net Income

Shows what else was withheld

45.1 Taxes and Your PaycheckForm W-4Fill out when you are hired for a jobRequired by __________________Gives info needed to determine correct amount to withhold from checkYour Responsibility for Proper WithholdingYoure responsible for consequences if form is ______________________

If amount paid to government not enough, then you owe at end of year

Allowancesworksheet provided with W-4, tells how to calculate # of allowances to ___________________________More __________________ claimed, smaller amount withheld will beWill not change amount of taxes owedIf do not pay enough in taxes, then owe at end of yearAdjusting Your AllowanceW-4 does not consider special situationsWithholding Too MuchStudents often have too much withheld because work more during summerSummer you may work 40 hrs so percentage based on that for whole ________________Withholding Too LittleAllowance calculated may result in too little _________________________________Can avoid paying large bill by:Sending extra tax payments to the IRSClaiming fewer allowancesSpecifying extra amount to be withheld from each paycheck on your ___________

Wkst. fill in W-4 form55.1 Taxes and Your PaycheckOver withholding as a Way to SaveSome choose to over withhold as a way to _________________Claiming too few allowances means a refund at end of yearNot good from financial point of _______________________Because if you put that money in a savings account, you make money or interest off of it.Reduce withholding to be more in line with what owed by claiming additional _____________________Goal make withholdings almost exactly equal to what you ____________

Home Work p. 162, Questions #1 - 7

65.2 File a Tax ReturnTax Return

Form W-2

Form 1099-INT

Form 1040EZ

Dependent75.2 File a Tax Return15. Deduction

16. Social Security Number

17. Taxable Income - 85.2 File a Tax ReturnYour Income Tax ReturnIf you have income, you must file a tax ________Income more than just wagesAll income you receive is ________________A tax return is a set of forms to calculate obligationsNot required to fill out if earned less than minimum ______________________Shows whether you owe the government or they owe youSources of Information for Your Tax ReturnForm W-2 Must have from employer by January 31stWill get for each job you hold for the fiscal _______________When filing, you get a copy and the IRS gets a copyIf you do not file, IRS will let you ________Form 1099-INTWill receive from bank stating what interest you earned from _________ __________This is all a younger person usually needs

Income tax formsThe EZ way must meet __________You are single or married filing jointly with your spouseNo __________________You and spouse under ________Neither you or spouse are blindHave taxable income of less than $_____________________Earned no more than $1,500 in interestYou had no income other than wages, interest, tips, scholarships, or unemployment ___________Form 1040A & 1040May use if :OlderHave childrenInvest in stock __________Allows you to list or itemize deductions to reduce amount you owehttp://www.ehow.com/video_22597967_file-1040ez-dependents-worksheet.html95.2 File a Tax ReturnHow to Complete a 1040EZIdentify YourselfNeed name, address, and social ___________ _____________Below ID number, is checkbox presidential elections check box to contribute to ______________IncomeTotal Wages, Salaries, & TipsIncome received for over one _______________Calculate total earnings from all W-2 formsTaxable Interest IncomeFill in amount of interest reported on your ___________________Unemployment CompensationFill in amount of any unemployment compensation receivedAdjusted Gross IncomeAdd income from lines 1, 2, & 3 together = adjusted ___________ _____________Record on line 4Determine Your DeductionIf parents claim you as dependent, you cannot claimIf no one else claims you, enter the amount ____________________.Forms allow tax payers to deduct those they supportReduces amount of income on which they must pay ________________Standard deduction amount that all tax payers may subtract from adjusted gross incomeAmount varies according to filing statusThe form will tell you what to do depending on filing ______________________

105.2 File a Tax ReturnYour Taxable IncomeLine 5 subtracted from adjusted gross income = __________ __________This is the income figure used to determine your taxesPayments and TaxFederal Income Tax WithheldThe next step on form that goes on line 7Total withholding for year is in box 2 on your ____________ for each jobIf had more than one job, need to add up all of box 2s Earned Income CreditUse if have low _______________Use line 8aTreated as if an additional tax _______________________www.youtube.com

Total PaymentsLine 9 will add withholdings and earned income ________Result is total amount of taxes already paidTax - http://www.irs.gov/pub/irs-pdf/i1040tt.pdf1040EZ contains table that tell you your total tax for yearTaxable income recorded on line _____________On table, locate two numbers within your _____________ income falls.Then find, in the next column, what applies to youof a

115.2 File a Tax Return12Math of Money, p. 169Use the tax table on p. 168. Your W-2 form reports that you made $35,539. Your W-2 form also reports that $4,053 was withheld from your wages for federal income tax. You receive a 1099-INT from your bank that tells you your interest income was $281. You are single and are not claimed by any other person as a dependent.

1. How much is your adjusted gross income?_______ + ________ = ______

2. How much is your taxable income________ - ________ = ______ *Use this answer to do answer # 33. What is your total tax for the year*use the tax table on p. 168

What is the amount of your payment or refund?_______ - ________ = ______

5.2 File a Tax Return13RefundDeposit Your Refund Electronicallyhave option of depositing electronically into checking or savings ________________You need the routing number, banks electronic address for fund transfers, to have directly depositedAlso need savings/checking _________________Amount You OweIf withholding is less than tax calculated for line 10, you would record number on line 12. This is amount you _________________

Sign HereMust sign name with ___________ hand writingMust write in dateWhen signing, saying that you are who you say you areCheck for Accuracy and File Your ReturnIf a mistake is made, then you may have to pay a penalty or receive a lower ____________________________If owe money, write a check to IRS or give credit card numberIf paying with credit card, may be charged additional fee of __________%The due date is April _______ unless falls on Sunday or a holiday5.2 File a Tax Return14Self-Employment TaxPeople who work for themselves pay ___________ _______Paying on a Quarterly basisMust earn more than $400 in a yearMust use form ______________Must pay every 3 monthsUp to you to remember to pay

Schedule CRequired to attach schedule C because of limited _____________Must keep detailed records of business expensesThe amount determined as net of loss on form written on line 12 of _____________________Self-employed pays same taxes as __________________________Difference is self-employed have to withhold their taxes and pay ________________________

5.2 File a Tax Return15Electronic FilingMay file _________________More than 60% filed online in 2006Takes 3 weeks or less to get refund ______________Can purchase software to do it on own(ex. Quicken, Tax Pro)There are also ______ ______Can get tax refund loanThey give you less than ____________ from refund, and take whatever you owe when comes in

Assignment:

Do questions 1 6 on page 172

5.3 Taxes and Government16Sales Tax -

Property Tax

20. Excise Tax

21.Estate Tax

22.Gift Tax

5.3 Taxes and Government1723. Business or License Tax

24. Customs Duty or Tariff - 5.3 Taxes and Government18Sources of Government Revenue Social Security and MedicareContributions to Social SecurityFICA regulations wages taxed at _________Collected on gross income up to max level & adjusted for inflation each year2008 maximum income taxable was $____________________Contributions to Medicare1.45% taken total percentage for both is __________% Employers ContributionMatch ___________________ for each dollar up to max of 15.3 cents employee=7.65, employer=7.65_____________must pay all of 15.3 cents half payments can be subtracted from adjusted gross income to reduce income taxes5.3 Taxes and Government19Classifying TaxesThree different ways to group taxes_________________Every taxpayer should be treated equallyBenefit Principle those who use govt services should pay for it(ex. Toll road)Ability-to-pay principle larger income pays larger shareEx. Fed. Govt range ___ -____% based on amount made Taxes and IncomeProgressive taxesTake larger share of larger incomes, ex. Salary went from ________ to ___________

Regressive TaxesTake smaller share of higher incomes than ___________Ex. Louisa make 16,000 per year, Ray makes 45,000 per year. Both buy cars for 10,000 at .08% sales tax. This takes 5% of Louisas income vs. 1.8% of RaysProportional Taxestake same share of all ______No perfect examples of this in our countryThe only difference between the three is the ____________ of different incomes that it takes

5.3 Taxes and Government20How Taxes are CollectedDirect Taxes income and property paid directly to ______________Indirect Taxes taxes included in the cost good or __________ = rentPay-as-You-Earn Taxes paid as you earn income, ex = Federal Withholding taken out at every ________________________Type of TaxesIncome Taxes states and cities impose income taxes patterned after Federal SystemDifference is tax _______________2.Sales Taxes taxes added to the price of goods & services at time of _________________Percentage of cost of each purchasePaid when ___________ food, gas, etcDivided between local and state governmentsProperty Taxes tax on value of real propertyGovt estimates value of land, structure, etcTax is percentage of _____________Used by local governments & schoolsCan be added to house _____________(called escrow account)

5.3 Taxes and Government21Excise Taxes collected on sale of specific goods and ______________.Ex. Tobacco, gasoline, & alcoholIncluded in the priceEstate and Gift TaxesEstate when a person dies, property may be inherited by those legally ________to the estateOnly estates of a certain amount and higher are _____________________Gift giver of gifts may have to pay if $12,000 or over as of 2008.Tax increased at times due to inflationBusiness and License TaxesTo operate certain businesses, must have license, permit, or stamp.Tax is paid for certification, which may have a ___________ (ex. Doctors, etc)

Customs Duties and Tariffs taxes to control the flow of products imported into the ________________ Imposed on some importsResults in some items from abroad to be sold at _____________ prices than they otherwise would be

Assignment- Answer questions on p. 178, #1-45.4Government Spending22The Power to InfluenceUsed to influence consumers buying _________________Taxing means fewer people will buy itExample Sin taxes on legal goods that are bad for your health. What item is taxed like this? ____________________Tax CutsLower taxes = more beneficial choicesIn 2008, President Bush led congress to give a tax rebate to encourage consumers to ____________________High unemployment areas reduced property taxes for businessesCan also deduct because donated to ________________________

Government SpendingFederal govt spends or transfers more than $2.65 ____________ each yearState & local spend half as muchYour cost = $___________ per yearMost spending pays for goods and services that benefit all AmericansPublic Goods roads, schools, national defense, etcFederal tax dollars used in ____ major areas

Vocab Definition & Sentence25. Public Good -

5.4Government Spending23Types of Federal SpendingSocial Security, Medicare, and other retirement programs - _____%National Defense ______%Social Programs, such as food stamps and unemployment _______%Physical, Human, and community development(education, general science, & space program) __________%Interest on National Debt ______%Law Enforcement & general government ____%Debt ReductionLate 1990s thru early 2000s had tax _______ used to pay down national debtBy 2002, fed. Govt spending more

24What State and Local Governments ProvideBuilding and maintaining ________Operating police and fire ________Maintaining a criminal justice systemBuilding and staffing schoolsBuilding and operating state colleges and _____________Supporting medical facilitiesConstructing and operating sewage treatment ____________Operating unemployment compensation ________________State and Local Government RegulationsEnforce many rules and _______ Example: drivers license, building permitCreate order and safety in states and local _________________

AssignmentP. 183, #1-8

5.4Government Spending