Taxes and Social Security

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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


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