TAXATION Lesson Activities Awesome.

REALITY (PAY)CHECK Interpreting Your Pay Stub

REALITY (PAY)CHECK Your paycheck comes with a pay stub. The pay stub gives details about how much you earn and the taxes you pay. Check out the parts of Wanda Worker’s pay stub.

REALITY (PAY)CHECK How much does Wanda earn per hour? $12.75

REALITY (PAY)CHECK What are Wanda’s total earnings for the current pay period? $1,020.00

REALITY (PAY)CHECK Which tax had the least taken out? The most? Least: Medicare tax Most: Federal income tax

REALITY (PAY)CHECK How much did Wanda pay in taxes this pay period? $188.64

REALITY (PAY)CHECK How much has Wanda paid in total taxes this year? $1,116.00

REALITY (PAY)CHECK How much federal tax has Wanda paid so far this year? $1,112.40

REALITY (PAY)CHECK What was Wanda’s gross pay during the current pay period? $1,020.00

REALITY (PAY)CHECK Was Wanda’s entire gross pay taxable?  Yes  No

REALITY (PAY)CHECK Wanda receives a check for which amount?  Gross pay  Net pay  Taxable amount

REALITY (PAY)CHECK What are the two pre-tax deductions that are taken out of Wanda’s check? Health insurance 401k Retirement

REALITY (PAY)CHECK Wanda paid $93 toward health insurance and retirement. Did she pay taxes on that $93?  Yes  No

REALITY (PAY)CHECK If Wanda’s state did not have an income tax, how much extra money would she have kept so far this year? $300.36

HOW MUCH WILL IT COST? A Look at Sales Tax

HOW MUCH WILL IT COST? Here is an imaginary county in an imaginary state. There are 2 cities in this county. Name them. If people in this county want to buy a car, they have 2 choices. What are they? Now find the 3 biggest stores in the county. State sales tax applies everywhere in the state. What is the state tax rate? County sales tax applies everywhere in the county. What is the county tax rate? City sales tax only applies inside a city’s boundaries. What is B-Town’s tax rate? What is A-Town’s tax rate? To find the total sales tax rate you will pay, add the tax rates of everywhere you are. If you are in B-Town, what will be the total sales tax rate? 5% + 2% + 3% = 10% Let’s learn how to calculate sales tax.

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 1) ADD to find the tax rate: State tax 5 % County tax 2 % City tax + 2 % Total Tax 9 %

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 2) MULTIPLY the tax by the price: $ 50 x  price  tax rate

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 3) MOVE the decimal point 2 places to the left. This is the amount of tax you will pay: $ 50 x The tax on this shirt will be $4.50.

HOW MUCH WILL IT COST? Example: How much will you pay for a $50 shirt at Bigmart in A-Town? 4) ADD the tax and the price to see the final cost: $ The shirt will cost $54.50 at Bigmart in A-Town.

HOW MUCH WILL IT COST? 1) A pair of headphones costs $10 at both Bigmart in A-Town and Hugemart in B-Town. What would you actually pay for the headphones at each store? The headphones will cost $10.90 in A-Town and $11.00 in B-Town. Tax rate = 9% $10 x 9 = 90 Tax = $0.90 Tax rate = 10% $10 x 10 = 100 Tax = $1.00 You try it: In A-Town:In B-Town:

HOW MUCH WILL IT COST? 2) Lisa is going to buy a new car! It costs $15,000 at both A-Town Dealership and at Bob’s County Dealership. What would she actually pay for the car at each place? The new car will cost $16,350 in A-Town and $16,050 at Bob’s. Tax rate = 9% $15,000 x 9 = Tax = $1, Tax rate = 7% $15,000 x 7 = Tax = $1, You try it: In A-Town:At Bob’s:

HOW MUCH WILL IT COST? 3) A stereo costs $257 at the County Store and $250 at Hugemart in B- Town. With taxes, what would you actually pay at each store? The stereo will cost $275 in B-Town and $ at the County Store. Tax rate = 10% $250 x 10 = 2500 Tax = $ = 275 Tax rate = 7% $257 x 7 = 1799 Tax = $ = You try it: If it costs you $10 in gas to drive to Hugemart, at which store will the stereo end up costing you the least? The County Store. In B-Town : At the County Store :

HOW MUCH WILL IT COST? 4) The state is tired of people putting gum under tables and chairs. It just put a $1 excise tax on each pack of gum! Gum used to cost $0.75 at both Bigmart and Hugemart. What will the new price tags say? The price goes up $1 per pack everywhere, so the new price will be $1.75. You try it: Bigmart Hugemart $0.75 $1.75

TAXATION Lesson Activities The End.