TAXATIONLesson Activities

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REALITY (PAY)CHECKREALITY (PAY)CHECKInterpreting Your Pay StubInterpreting Your Pay Stub

REALITY (PAY)CHECK

Your paycheck comes with a pay stub. The pay stub gives details about how much you earn and the taxes you pay. Check out the parts of Wanda Worker’s

pay stub.

REALITY (PAY)CHECK

How much does Wanda earn per hour? $12.75

REALITY (PAY)CHECK

What are Wanda’s total earnings for the current pay period? $1,020.00

REALITY (PAY)CHECK

Which tax had the least taken out? The most? Least: Medicare tax

Most: Federal income tax

REALITY (PAY)CHECK

How much did Wanda pay in taxes this pay period? $188.64

REALITY (PAY)CHECK

How much has Wanda paid in total taxes this

year?$2,263.68

REALITY (PAY)CHECK

How much federal tax has Wanda paid so far this year? $1,112.40

REALITY (PAY)CHECK

What was Wanda’s gross pay during the current pay period? $1,020.00

REALITY (PAY)CHECK

Was Wanda’s entire gross pay taxable?

Yes No

REALITY (PAY)CHECK

Wanda receives a check for which amount?

Gross payNet payTaxable amount

REALITY (PAY)CHECK

What are the two pre-tax deductions that are taken out of Wanda’s check?

Health insurance401k Retirement

REALITY (PAY)CHECK

Wanda paid $93 toward health insurance and retirement. Did she

pay taxes on that $93? Yes No

REALITY (PAY)CHECK

If Wanda’s state did not have an income tax, how much extra money

would she have kept so far this year?$300.36

HOW MUCH HOW MUCH WILL IT COST?WILL IT COST?A Look at Sales TaxA Look at Sales Tax

HOW MUCH WILL IT COST?

Here is an imaginary county in an

imaginary state.

There are 2 cities in this county. Name them.

If people in this county want to buy a car,

they have 2 choices. What are they?

Now find the 3 biggest stores in the

county.

State sales tax applies everywhere in the state. What is the state tax rate?

County sales tax applies everywhere in the county. What

is the county tax rate?

City sales tax only applies inside a city’s boundaries. What is B-Town’s tax rate?

What is A-Town’s tax rate?

To find the total sales tax rate you will pay, add the tax rates of everywhere you are.

If you are in B-Town, what will be the total

sales tax rate?

5% + 2% + 3% = 10%

Let’s learn how to calculate sales tax.

HOW MUCH WILL IT COST?

Example: How much will you pay for a $50 shirt at Bigmart in A-Town?

 1) ADD to find the tax rate:

State tax 5 %County tax 2 %City tax + 2 %Total Tax 9 %

HOW MUCH WILL IT COST?

Example: How much will you pay for a $50 shirt at Bigmart in A-Town?

 2) MULTIPLY the tax by the price:

$ 50x 9450

price

tax rate

HOW MUCH WILL IT COST?

Example: How much will you pay for a $50 shirt at Bigmart in A-Town?

 3) MOVE the decimal point 2 places to the left. This is the amount of tax you will pay:

$ 50x 9450

450The tax on this

shirt will be $4.50.

HOW MUCH WILL IT COST?

Example: How much will you pay for a $50 shirt at Bigmart in A-Town?

 4) ADD the tax and the price to see the final cost:

$ 50.00+ 4.50 54.50

The shirt will cost $54.50 at

Bigmart in A-Town.

HOW MUCH WILL IT COST?

1) A pair of headphones costs $10 at both Bigmart in A-Town and Hugemart in B-Town. What would you actually pay for the headphones at each store?

The headphones will cost $10.90 in A-Town and $11.00 in B-Town.

Tax rate = 9%$10 x 9 = 90Tax = $0.90

Tax rate = 10%$10 x 10 = 100Tax = $1.00

You try it:

In A-Town: In B-Town:

HOW MUCH WILL IT COST?

2) Lisa is going to buy a new car! It costs $15,000 at both A-Town Dealership and at Bob’s County Dealership. What would she actually pay for the car at each place?

The new car will cost $16,350 in A-Town and $16,050 at

Bob’s.

Tax rate = 9%$15,000 x 9 = 135000Tax = $1,350.00

Tax rate = 7%$15,000 x 7 = 105000Tax = $1,050.00

You try it:

In A-Town: At Bob’s:

HOW MUCH WILL IT COST?

3) A stereo costs $257 at the County Store and $250 at Hugemart in B-Town. With taxes, what would you actually pay at each store?

The stereo will cost $275 in B-Town and $274.99

at the County Store.

Tax rate = 10%$250 x 10 = 2500Tax = $25.00250 + 25 = 275

Tax rate = 7%$257 x 7 = 1799Tax = $17.99257 + 17.99 = 274.99

You try it:

If it costs you $10 in gas to drive to Hugemart, at

which store will the stereo end up costing you the

least?

The County Store.

In B-Town: At the County Store:

HOW MUCH WILL IT COST?

4) The state is tired of people putting gum under tables and chairs. It just put a $1 excise tax on each pack of gum! Gum used to cost $0.75 at both Bigmart and Hugemart.

What will the new price tags say?

The price goes up $1 per pack everywhere, so the new price will be $1.75.

You try it:

Big

mar

t

Hugem

art

$0.75

$0.75

$1.75

$1.75

TAXATIONLesson Activities

The End.

A. WHICH TAX IS IT?

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B. TAX ORGANIZER

• SALES• EXCISE TAX• ALCOHOL, TOBACCO, GASOLINE, AIR TRANSPORTATION, FISHING EQUIPMENT, OR INDOOR TANNING

• TARIFFS• COUNTRIES

B. TAX ORGANIZER

• INCOME TAX• YEAR• SOCIAL SECURITY TAX• RETIREMENT• MEDICARE TAX• 65

B. TAX ORGANIZER

• PROPERTY TAX• ESTATE TAX

C. GOVERNMENT REVENUE

• SOCIAL SECURITY & MEDICARE• INDIVIDUAL INCOME TAX• CORPORATE INCOME TAX• EXCISE, ESTATE, TARIFFS• 2,311,000,000,000

D. TAX BRACKETS

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