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.