1. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved1 Introduction Everyone who works and earns more money than the specified minimum amount is required to pay federal income taxes Federal income taxes are the largest tax expense most people will have in any given year Current federal income tax laws consist of more than 7,000 pages of complex rules and regulations – many of which change every year The average individual believes they pay too much income tax and think the process of paying is too complex

2. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved2 Objectives Explain how a pay-as-you-earn system works You should be able to do the following after completing this lesson. Identify what a standard deduction, personal exemption and tax deduction are Explain how local income taxes are implemented Review what income taxes are based on Review how many states collect state income taxes Define what an income tax is Discuss the difference between gross and taxable income Define what a progressive tax system is

3. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved3 5.2.1 – Income Taxes What income taxes are and how they are collected In this section, you will learn: Who is required to pay income taxes Taxable Income Example What taxable income is and how it is calculated What gross income and filing status are What the components of gross income are What a tax deduction, standard deduction and personal exemption are You will run the following Interactive Example How a pay-as-you-earn system works

4. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved4 5.2.2 – Federal Income Taxes How a progressive tax system works In this section, you will learn: How many federal income tax brackets there are How federal income taxes are calculated The minimum and maximum tax rates for federal income taxes What federal income taxes are based on

5. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved5 5.2.3 – Social Security and Medicare Taxes What Social Security taxes are and what they are based on In this section, you will learn: What Medicare taxes are and what they are based on What the current tax rate for Social Security taxes is How Social Security and Medicare taxes are collected Federal Taxes Exercise You will run the following Interactive Exercise What the current tax rate for Medicare taxes is Who must pay Social Security and Medicare taxes

6. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved6 5.2.4 – State/Local Income Taxes Which states do and don’t collect state income taxes In this section, you will learn: What state income taxes are based on How state income taxes compare to federal income taxes State Income Tax Example Who can levy local income taxes What an occupational tax is and who implements it You will run the following Interactive Example Why most local governments don’t implement income taxes

7. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved7 5.2.5 – Tax Freedom Day What Tax Freedom Day is In this section, you will learn: When Tax Freedom Day was introduced What the significance of Tax Freedom Day is When Tax Freedom Day occurred in 2010 What total tax burden is

8. Lesson 5.2 Income Taxes February 28, 2011Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved8 Discussion Questions What would it mean to you if you were able to invest a portion of the Social Security taxes you and your employer must pay each year? Has the amount of money individuals’ pay in federal income taxes decreased in the last few years?