Presentation on theme: "PowerPoint Presentation Part 1"— Presentation transcript:
1 PowerPoint Presentation Part 1 TaxesPowerPoint Presentation Part 1
2 What are taxes?Taxes are fees that support government programs and are required by law to be applied to income, property, and goods.Taxes are collected at the federal, state, and local levels.
3 Why pay taxes?Taxes pay for a variety of services we use such as road maintenance, public schools, police and fire protection, the armed services, parks, libraries, and retirement income for the elderly.
4 Tax Categories There are four major categories of taxes. These include:Taxes on earnings (income taxes)Taxes on purchases (sales taxes)Taxes on property (property taxes)Taxes on wealth (estate taxes)
5 Taxes on Earnings (Income) Income tax is the tax on wages, salaries, commissions, fees, tips, bonuses and self-employed earnings.Income taxes can be collected by federal, state, and local governments.Income tax is a type of progressive tax. This means that the tax rate increases as your income level increases.
6 Federal Income TaxThis is collected by the federal government to support its programs.This is the federal government’s main source of revenue.Employers withhold this tax from employees as payroll deductions and then send the tax to the Internal Revenue Service (IRS).Self-employed individuals are responsible for withholding the proper amount of tax from their incomes and submitting this to the IRS. This is usually on a quarterly basis.
7 The IRSThe Internal Revenue Service is the federal agency that collects federal income taxes and enforces the nation’s tax laws.The IRS is an agency under the Department of Treasury
8 State Income TaxMost states also collect an income tax that helps pay for state services.This is also collected by every employer on behalf of its employees as a payroll deduction and then sent to the state revenue department.Tennessee is one of nine states that do not have a state income tax.
9 Local Income TaxSome local governments also collect an income tax that helps pay for local services.Some of these services include: schools, police, and fire protection.Oak Ridge does not have a local income tax.
10 FICA FICA stands for the Federal Insurance Contributions Act. This is a payroll tax on income that funds Social Security and Medicare.Social Security (OASDI) provides for old-age, survivors, and disability insurance benefits.Every employee pays a tax of 6.2% of their income for Social Security.
11 FICA (Continued)Medicare provides health insurance to retirees and certain disabled persons.Every employee pays a tax of 1.45% of their income for Medicare.Employers match their employees contributions for both Social Security and Medicare.