Taxes and Social Security
unearned income examples:
unemployment compensations interest income
The annual wage and tax report from your employer
w2
What tax form am I? I am received in January. There is one of me for every employer that you worked for in the previous year. I have information on how much you earned and how much you paid in taxes for the previous calendar year.
w2
the employer mails this form to its employees
w2
this form must be provided by jan 31st
w2
The form that helps the employer determine how much to deduct for federal income tax
w4
Which form will determine how much money is withheld from your paycheck for federal and state income taxes?
w4
this form is always completed by the employee
w4
this form is used ot calculate how much taxes will be taken out of your paycheck
w4
this form must be completed on the first day of work
w4
earned income examples:
wages, salaries, tips
if you claim 1 allowance, who are you claiming?
yourself
Social Security Tax
-A Social Security tax is the tax levied on both employers and employees to fund the Social Security program. Social Security tax is usually collected in the form of payroll tax or self-employment tax. The Social Security tax pays for the retirement, disability, and survivorship benefits received by millions of Americans each year. -Social Security Tax is listed on a paystub as FICA Tax -Every individual pays the same percentage (6.2%) Social Security Tax
Property Tax
-A tax on real estate (owning property like a house or condo) collected by a local government. Most of the $ is spent on education
Sales Tax
-A tax on the sale of goods and services. Example: Purchase an item for $1.0 with a sales tax of 7% you will have to pay $1.07
Interest Income
-Interest you earn on savings accounts.
unemployment compensation
-Paid by the state to unemployed workers who have lost their jobs due to layoffs -Unemployment compensation is meant to provide a source of income for jobless workers until they can find employment. In order to be eligible for it, certain criteria must be satisfied by an unemployed worker, such as having worked for a minimum stipulated period and actively looking for employment
State Income Tax
-Taxes collected by State Governments -State and local taxes include property tax, personal and corporate income tax, and sales tax
Federal Income Tax
-Taxes collected by the Federal government. - Federal Income Tax is collected by the Internal Revenue Service
how many years of work are needed to qualify for full benefits
10
could be completed by the employee or an accountant
1040
this form could indicate the federal gov owes you money
1040
what percentage do people pay for social security tax
6.2% Everyone pays 6.2% up to the cap of $132,900 (as of 2019).
what gov agency is in charge of collecting taxes
IRS
progressive tax
A tax for which the percentage of income paid in taxes increases as income increases
net pay
Amount of income left after taxes and deductions have been taken out.
What does the term "withholding" mean in reference to your paycheck?
It is how much is being taken out of your pay check for taxes.
Where does the Federal Government get most of its income?
Personal Income Tax
net pay is also known as
Take home pay
Why is it important to be extremely careful when completing your 1040 form?
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
how does social security cap work?
When you earn over $132,900, you pay 0% tax on any income over $132,900. -You still pay 6.2% on your first $132,899.99.
do you have to pay taxes on your tips?
YES
proportional tax
a tax for which the percentage of income paid in taxes remains the same for all income levels -flat 10% tax
what is the tax due date
april 15
1040
calculate tax liability -how much taxes you will be responsible for paying
regressive tax
everyone pays the same AMOUNT of money -takes higher toll on lower incomes
The amount of federal income tax to withhold from your pay is based on
gross pay marital status the number of withholding allowances
4 purposes of taxes?
revenue to fund public goods and services influences behavior stabilizes economy address social change
w4 form
report allowances you are claiming
1099 INT
report any interest income you earned
W2 form
shows a summary of your income, taxes withheld and deductions for 1 employer for the calendar year
what 2 types of taxes are in FICA
social security and medicare
An amount which taxpayers may deduct from their gross income is called
standard deduction
the part of income that is NOT taxed?
standard deduction
claiming 1?
take LESS amount of taxes now out of each paycheck -get more money per paycheck -get smaller refund
claiming 0?
take out max amount of taxes NOW out of each paycheck -get bigger tax refund
what type of income is used to determine your tax liability for the year?
taxable income
gross pay
the total amount of an employee's earnings before deductions are taken out
