2 Payroll TaxesPayroll Taxes are taxes based on the payroll of a businessThese taxes are paid to the government by you and your employerPayroll Taxes include income taxes and social security taxes.
3 Income TaxesIncome Taxes are taxes you pay on most type of income you receive.Income taxes are not a fixed percentage of income that all Americans.The amount varies, depending on each taxpayer’s financial and family situation.Some taxes on income support social programs.
5 Virginia Tax Rates IF YOUR VIRGINIA TAXABLE INCOME IS: Not over $3,000, your tax is 2% of your Virginia taxable income.but not your tax of excessover— over— I s— over—$ 3,000 $ 5,000 $ % $ 3,000$ 5,000 $ 17,000 $ % $ 5,000$ 17,000 $ % $ 17,000ExampleIf your taxable income is $90,000, your tax is $ % of the amount over $17,000.This equals $720 + (.0575 x $73,000) = $720 + $4, = $4, which should be rounded to $4,918.
6 Federal Insurance Contribution Act FICAFederal Insurance Contribution ActThe law that requires workers to contribute to social security and Medicare.
7 WithholdingYour employer collects payroll taxes by deducting or withholding money from your wages.Withholding enables the government to collect taxes at a steady rate, rather than at the end of the year.Withholding also makes it more likely that people will pay their taxes.
8 Your pay stubYour pay stub is always attached to your pay check
9 Your pay StubGross income is the amount you earn before taxes are withheld.Net Income is the amount you receive after withholdings are subtracted from your gross pay.
10 Form W-4When you are hired your employer will ask you to complete federal form W-4.Form W-4 provides the information your employer needs to determine the proper amount to withhold from your paycheck.
11 Your Responsibility for Proper Withholding If the amount withheld from your paycheck during the year is not close to the total tax you owe, the Internal Revenue Service may fine you.The Internal Revenue Service (IRS) is the federal agency that collects income taxes.
12 AllowancesA worksheet provided with your W-4 tells you how to calculate the number of allowances you should claim.An allowance is a number that reduces the amount of money withheld from your paycheck.The larger the number of allowances you claim, the smaller the amount withheld.
13 QuestionsHow do you and other taxpayers benefit from the taxes you pay?What are payroll taxes?What is the purpose of Form W-4?In what type of situations should you consider claiming extra allowances?What is your main goal in determining how many allowances to claim?
14 Your Income Tax ReturnA tax return is a set of forms that taxpayers use to calculate their tax obligation.IncomeWagesTipsInterest
15 Sources of Information for Your Tax Return Form W-2This form is a summary of your earnings and withholdings for the year for a job.
16 Sources of Information for Your Tax Return Form 1099-INTThis form is a statement of the interest your bank paid on your savings that year.
17 Income Tax Forms Form 1040EZ You must meet these criteria to use this form
18 Fill Out the 1040EZ Identify Yourself Income Unemployment Compensation Social Security NumberIncomeYour income today is $64,250.00Your Taxable Interest is $148.35Unemployment CompensationThis amount is $0.00Adjusted Gross IncomeAmount of all above added together
23 Fill Out the 1040EZ Determine Your Dedications Your Taxable Income Yours is $9350 because you are singleYour Taxable IncomeAdjusted Gross – DeductionsFederal Income Tax Withheld$10,835Did you get a refund?
27 QuestionsWhat information do you need to complete a Form 1040EZ, and where does it come from?What is the difference between adjusted gross income and taxable income?Why should you check your work before filing your tax return?
28 Taxes and Government Contributions to Social Security Under FICA regulations, workers’ wages are taxed at a rate of 6.20%This percentage is collected on gross income up to a maximum level that is adjusted each year.In 1999 the maximum income taxable for social security was 72,800.
29 Taxes and Government Cont. Contributions to MedicareAn additional 1.45%is taken on all earned income to pay for the Medicare program.Your Employer’s ContributionEmployers match employees’ payments for social security and Medicare.For each dollar you earn up to the maximum amount, 15.3 cents goes to the government for these taxes.
31 Taxes and IncomeThere are 3 ways taxes are based on share of income they take as people’s income changeProgressive TaxTakes a larger share of income as the amount of income grows.Someone who makes $25,000 would pay 15% while someone who made $350,000 would pay 39.6%
32 Taxes and Income Regressive taxes Proportional taxes These taxes take a smaller share of income as the amount of income grows.Sales TaxJoe 20,000 (pays 6% on 10,000 car) 3 percent of his incomeSally 50,000 (pays 6% on 10,000 car) 1.2 percent of her incomeProportional taxesTakes the same share of all peoples taxesNo examples
33 How taxes are Collected DirectTaxes are paid directly to the governmentIndirectTaxes you pay that are included in the cost of a goodLandlords put property taxes in there rentPay-as-you-earnFederal withholdings
34 Types of Taxes Income Taxes Sales tax Property taxes Most states and some cities have income taxes patterned after the federal systemFederal 15% to 39.6%States less than 10%Sales taxTaxes added on to the price of goods and services at the time of purchaseProperty taxesTaxes on the value of real estate property.
35 Types of Taxes Excise taxes Estate and Gift Taxes Taxes on sale of specific goods and services.Such as tobacco, gasoline, and alcoholic beverages, firearms, air travelEstate and Gift TaxesTaxes on property which will be received by those legally entitles to the estate.Gift taxes are taxes that may be paid by the giver of gifts worth more than 10,000
36 Types of Taxes Business and License Tax Customs Duties and Tariffs To operate certain kinds of business, companies, individuals have to have license, permit, or stampThese taxes are paid for these certificationsCustoms Duties and TariffsTo control the flow of products that are imported into this US.This sometimes results in items from abroad being sold at higher prices.
37 Questions What is the largest source of federal government revenue? Which governments benefit from sales taxes?What are the principals of taxation?What is the difference between sales and excise taxes?
38 Tax Cuts Lower taxes encourage consumers to make beneficial choices. New York eliminated sales taxes on certain products for short periods of time to encourage consumer spending to improve the economyMany local governments in areas with high unemployment reduce property taxes for businesses that operate there.
39 CharitiesIf you contribute to a charity, the government may allow you to deduct your contribution from your adjusted gross income.This tax break influences many people to give more to charities.
41 What State and Local Governments Provide Buildings and maintaining local roadsOperating police and fire protectionMaintaining a criminal justice systemBuilding and staffing public schoolsBuilding and operating state colleges and university
42 No Sales Tax StatesSales taxes in the United States are assessed by every state except Alaska, Delaware, Montana, New Hampshire and Oregon. Hawaii has a similar tax although it is charged to businesses instead of consumers.
43 No Income Tax StatesSeven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income.
44 Best and Worst States for Taxes Even if you live in the most heavily taxed state, Maine (which collects an average of 13.5% of residents' income), you might not be ready to high-tail it to Alaska, the state with the lowest taxes (6.6%, and the only state that lacks both sales and income taxes), unless you have an affinity for mosquitoes and seemingly endless tundra.