1.  Log into Moodle and complete today’s Bell Ringer REMINDER: Today is the last day to turn in anything from this Marking Period › Be checking your grades! AGENDA : 11:30 –12:30: Budget Simulation Part 2 12:30-1:00: Federal Tax Introduction OUTCOMES : 1. Define net pay and gross pay 2. List the deductions that come out of each paycheck and the reasons for each deduction 3. Describe how federal taxes, Medicare, and Social Security are calculated

3. Used For: 1. Retirement Benefits – People who are at least 62 2. Disability Benefits – for workers who are disabled and unable to work 3. Survivor’s Benefits – Paid to spouse and dependent children when a social security recipient dies 4. Some Unemployment Benefits for those who are unemployed

4. How is the amount determined?  You and your employer both pay the Social Security Tax Rate – 6.2% › Only paid on the first $113,700 of salary

5. Used for: › Medicare – Provides hospital insurance for some disabled people and for people over 65

6. How is this amount determined?  You and your employer both pay the Medicare Tax Rate – 1.45% › An extra 0.9% on all wages earned above $200,000

7.  Sometimes Combined under the name: › FICA (Federal Insurance Contributions Act)

9.  Insurance fees (medical, dental, vision)  Retirement Plan contributions  Union dues  Christmas fund  Parking fees  Etc.

10.  Federal Withholding tax – Money that is deducted from employees wages for income taxes › Amount depends on worker’s wages, marital status, and number of withholding allowances claimed › This is a “Progressive Tax”  The more you earn, the higher the percentage you pay

12.  Withholding allowance – Used to reduce the amount of tax withheld › Claim one allowance for yourself, your spouse, and each child or dependent  How does an employer know how many allowances you have? › You fill out a W-4 form

13.  Claiming 0 – they take out the maximum amount  Claiming 1+ – they take less out › Claim 1 for you, your spouse, and each dependant › If you are a dependant, you cannot claim yourself  EXEMPT – some people are exempt for various reasons › Main reason – you make less than $9,750 a year

14.  The government gives you a break on each person you are in charge of financially, including: › Yourself › Your spouse › Your children › Elderly Parents › Any other person living with you who is financially dependant on you

15.  Each allowance that you claim lowers your income by $3,800  You also get to “lower your income” by using one of the following standard deductions: › Single Standard Deduction - $5,950 › Married Standard Deduction - $11,900

16. Single Tax Bracket  10% on taxable income from $0 to $8,700, plus  15% on taxable income over $8,700 to $35,350, plus  25% on taxable income over $35,350 to $85,650, plus  28% on taxable income over $85,650 to $178,650, plus  33% on taxable income over $178,650 to $388,350, plus  35% on taxable income over $388,350.

17.  Gross Pay – Wages earned  Deductions – taxes and other fees taken out  Net Pay – Take home pay Gross Pay – Deductions = Net Pay

19.  Please log into Moodle › Download the “