State Income Tax pp SECTION
Click to edit Master text styles Second level Third level Fourth level Fifth level 2 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Section Objective Compute: state taxes on a straight percent basis
Click to edit Master text styles Second level Third level Fourth level Fifth level 3 SECTION Copyright © Glencoe/McGraw-Hill 2-2 personal exemptions (p. 119) The number of people an employee supports, on which taxes are based, also called withholding allowances. Key Words to Know
Click to edit Master text styles Second level Third level Fourth level Fifth level 4 SECTION Copyright © Glencoe/McGraw-Hill 2-2 How do I calculate taxable wages? Taxable Wages = Annual Gross Pay – Personal Exemptions Formula 1
Click to edit Master text styles Second level Third level Fourth level Fifth level 5 SECTION Copyright © Glencoe/McGraw-Hill 2-2 How do I calculate annual taxes withheld? Annual Tax Withheld = Taxable Wages × Tax Rate Formula 2
Click to edit Master text styles Second level Third level Fourth level Fifth level 6 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Jack’s Jackpot p. 119 Why do most states charge taxes?
Click to edit Master text styles Second level Third level Fourth level Fifth level 7 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Patricia Line’s gross pay is $65,800 a year. The state income tax rate is 3 percent of taxable wages. Line takes a married exemption for herself and her husband. Use the Personal Exemptions table on the next slide to find out how much is withheld from her gross earnings for state income tax within the year. Example 1
Click to edit Master text styles Second level Third level Fourth level Fifth level 8 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Personal Exemptions Single:$1,500 Married: 3,000 Each Dependent: 700 Example 1 (cont.)
Click to edit Master text styles Second level Third level Fourth level Fifth level 9 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Find the taxable wages. Annual Gross Pay – Personal Exemptions $65, – $3, = $62, Example 1 Answer: Step 1
Click to edit Master text styles Second level Third level Fourth level Fifth level 10 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Find the annual tax withheld. Taxable Wages × Tax Rate $62, × 3% = $1, Example 1 Answer: Step 2
Click to edit Master text styles Second level Third level Fourth level Fifth level 11 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Use the Personal Exemptions table in Example 1 above to find the amount withheld. Tomoko Nakazawa. Earns $38,657 annually. Married, no dependents. What are her personal exemptions? Practice 1
Click to edit Master text styles Second level Third level Fourth level Fifth level 12 SECTION Copyright © Glencoe/McGraw-Hill 2-2 $3,000 Practice 1 Answer
Click to edit Master text styles Second level Third level Fourth level Fifth level 13 SECTION Copyright © Glencoe/McGraw-Hill 2-2 Paul Chamello earns $168,000. He is single. His personal exemptions include himself and his five children. The state tax rate is 2.5 percent of taxable income. What amount is withheld yearly for state income tax? Practice 2
Click to edit Master text styles Second level Third level Fourth level Fifth level 14 SECTION Copyright © Glencoe/McGraw-Hill 2-2 $4,075 Practice 2 Answer
State Income Tax 2-2 END OF SECTION