Personal Finance Unit 3 Taxes and Paychecks

What are the major forms used to fill out your taxes? Which one do most students use?

1. 1040 EZ 2. 1040 A 3. 1040 Most students use 1040 EZ.

What are the 6 different types of deductions people can have to take from their paychecks?

1. FICA (SS and medicare) 2. Federal Income Tax 3. State Income Tax 4. Medical Benefits 5. Retirement Contribution 6. Health Care Spending

Name four things our tax money goes to fund?

1. government operations 2. public goods and services 3. roads 4. bridges

What percentage of our paycheck goes to Medicare tax?

1.45%

What percentage of our gross income will be taken out for taxes?

30%

What percentage of our paycheck goes to social security?

6.2%

When must you tax return be filled by?

April 15th

Form W-4

Employee's Withholding Allowance Certificate. Fill out when you apply for a job. It determines the percentage of gross pay which will be withheld for taxes. If I owed money on taxes last year I can lower my allowances so I can have more money.

If you cannot have it completed by then, you must file an __

Extension

What does the largest part of your income taxes go to

Federal Taxes

When might someone get audited by the IRS?

If they didn't pay their taxes

Form 1099-INT

Interest. The bank sends it to you to show the earned interest of savings and is used to file your taxes.

Why do you itemize deductions when filling out a tax return?

Refund of money that you are required to spend because of your job.

Form I-9

Stands for employment eligibility verification; documentation must be provided this may include, a driver's license, passport, social security card, and birth certificate.

If you claim fewer allowances on your W-4, what will happen to your next paycheck?

The more money will come out of your paycheck.

Form W-2

Wages and Tax Statement; form that summarizes an employee's earnings and amounts of taxes withheld. You receive it by your employer by Jan.31st and is used to file you taxes.

What should you do if you get audited by the IRS?

You should be on time, have documents, right or time, and should be positive and honest.

What are the three ways the amount of income taxes withheld are determined?

amount of income, allowances on W-4, and how often you payed

What does your paycheck stub tell you?

details the paycheck deductions

Payroll Card

electronically carries the balance of the employee's net pay

Paycheck

employee responsible for handling the paycheck immediately to see payroll stub and deductions

Direct Deposit

employees directly deposit employee's paycheck into authorized employee's depository institution

Medicare is our nation's__

health care

What are some common itemized items?

medical/dental expenses, real estate taxes, student loans interest, charitable contributions, and mortgage interest.

Both social security and medicare make up this tax

regressive

Social Security is our nation's__

retirement

What does year-to-date refer to on stub?

total amount of deductions refers to the pay period.