Presentation on theme: "Taxes are what we pay for civilized society Oliver Wendell Holmes Jr., 1904."— Presentation transcript:
Taxes are what we pay for civilized society Oliver Wendell Holmes Jr., 1904
What are taxes? Taxes are required contributions to state revenue, levied by the government on personal income and business profits or added to the cost of some goods, services, and transactions.
Required Payroll Deductions By law, employers must pay taxes deducted from employee paychecks. The most common taxes are federal and state, and sometimes cities have their own local taxes. In addition, employees have to pay a (FICA) Social Security tax, and Medicare tax contribution with each paycheck.
Social Security The Social Security tax is also called the FICA (Federal Insurance Contributions Act) tax. Social Security taxes provide the following benefits for employees and their dependents: retirement benefits benefits for the dependents of retired workers benefits for the disabled and their dependentsSocial Security
Medicare The Medicare tax is used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.Medicare tax
Voluntary Payroll Deductions Health Insurance Retirement Savings Union Dues Charitable Contributions
Taxes Fund Public Goods and Services National Defense State and Local Police Financial Aid Health Care for Elderly Public Education Social Services
American Revolution caused debt The Power to Collect Taxes Tax was necessary to pay debt Article 1, Section 8 of the U.S. Constitution granted Congress power to tax
The Federal Government Dollar- Where It Comes From Excise, Customs, Estate, Gift, and Miscellaneous Taxes 7% Personal Income Taxes 43% Social Security, Medicare, and Unemployment and other Retirement Taxes 36% Corporate Income Taxes 13% Borrowing to Cover Deficit 6%
The Federal Government Dollar- Where It Goes Homeland Security 1% Medicare, and other Retirement 32% DOD Military 19% Social Security 21% Other 19% Net Interest on the Debt 7%
What is our tax money used for? Bridges Road maintenance Research Education Armed services, national defense, veterans, and foreign affairs Retirement income for elderly Social programs Physical, human, and community development Law enforcement Interest on the national debt
How Taxes Evolve House Ways and Means Committee Full House Senate Finance Committee Full Senate Joint Conference Committee Senate/House Compromise bill President vetoes bill Tax law enacted President signs bill Veto override fails Veto override passes
Each person is responsible for filing a tax return. Voluntary Compliance
Information on taxpayer returns is private Taxpayer Rights Taxpayers have the right to appeal an IRS decision
Tax Avoidance versus Tax Evasion Tax Evasion: Failure to pay legally due taxes Tax Avoidance: Legal means of decreasing your tax bill
The income tax law is a lot of bunk. The government cant collect legal taxes from illegal money. Al Capone
Tax Deduction - expense you can subtract from adjusted gross income to figure taxable income. Deductions - Standard vs. Itemized –Standard – amount of money set by IRS –Itemized – specific expense that you can deduct (primarily medical) Exemptions - deduction from adjusted gross for a dependent (spouse, children, etc.)
Tax Forms W-4 W EZ Utah State Tax Form
State & Federal Income Tax
Utah State Tax
Do YOU have to file a tax form? If your parents claimed you as a dependent: -Was you earned income over $5,000. If you can answer yes, you probably have to file a federal income tax return. Even if you dont have to file, you may want to-filling is the only way to get a refund. If you are not claimed as dependents on parents tax form and your gross income was at least $8,200, you probably have to file a federal income tax form.