1. 7.2(part 1) Notes
INCOME TAX

2. Warm-up:
What is 18% of 975?
What tip would you leave on a dinner that costs $45.95 (given that you received good service)?
What’s the last day to mail out your tax documents?

3. Lots of New Vocabulary
Income Tax: a percentage of your income collected by the government. Why do we pay taxes?
Gross Income: total income for the year including wages, tips, interest of dividends from investments, unemployment compensation, profits, rental income, and your winnings from “The Price is Right”.
Adjustments: allowable amounts that are tax-free. Example: tax-deferred savings plan (retirement accounts).
Adjusted Gross Income: Gross Income - Adjustments

4. Vocabulary (continued)…
Exemption: fixed amount on your return for each person supported by your income.
Standard Deduction: a lump-sum amount that you can subtract from adjusted gross income.
Itemized Deduction: deductions listed separately including mortgage, state income taxes, property taxes, charitable giving, medical expenses (in excess of 7.5% of adjusted gross income).
Taxable Income = Adjusted Gross Income – (Exemptions + Deductions)

5. Taxable Income = Adjusted Gross Income – (Exemptions + Deductions)

6. Income Tax
Tax Credits: sums of money that reduce the income tax owed by the full dollar-for-dollar amount of the credits.

7. Income Tax

8. NAME________________________________ PER: ______________