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2.2.2.G1
The Basics of TaxesPersonal Finance
Mrs. Bullock
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What are taxes?
Taxes – A ________ of money demanded by a government to support the government itself as well as specific facilities or ____________
Paid by taxpayers – A person who ______ a tax to national, state, county or municipal (city/town) _________________________
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Community
United States
_______ County City/ town
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What are benefits of being a part of these communities?
__________ Libraries
Military for
________ security
___________________
Police and fire
departments
___________ (parks, trails)
?
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
“You are better off being in a community than by yourself”
As a __________ member you receive many benefits you
could not pay for individually
___________ are a way members of a community provide for one another
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
How do taxpayers pay taxes?
________Tax
Payroll Tax
________Tax
Sales Tax
________ Tax
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Income tax
Income tax - tax on ________ and unearned income
Earned income -money earned from working for ______
Unearned income - income received from
sources ________ than employment
Example: _______ and salaries earned from employment
Example: ________ earned from a
savings account
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Components of income tax
Federal income
tax
State income
tax
____________ tax
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Federal Income Tax
• Earned and unearned income
• __________ income = _________ tax paid
• __________ of people living in the U.S.
• Operations of __________ government
• Government programs• _________• defense of
the nation• disaster
relief
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
State Income Tax
• Earned and __________ income
• Higher income = _________ tax paid
• Those living in states with a ___________ income tax
• _______ all states have a state income tax
• __________ by state
• Examples:• State
__________• Operations
of state government
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Payroll TaxPayroll tax – A tax on earned income that supports
the Social Security and Medicare programs (also known as FICA)
• A set percentage of earned income
• Deducted out of paycheck (except for self-employed)
• Individuals who earn income from working for pay
• Employers
• Social Security program
• Medicare program
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What is Social Security?
• ______________ for:• _________________ • People with
profound ________________
• Children who have lost a parent
• A person with children who has experienced the death of a spouse
• ________% of earned income (decreased to 4.2% for 2011-12)
• Up to an annual _________________
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What is Medicare?
• Helps pay for ___________ care for ___________ citizens
• 1.45% of earned income
• No ___________
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 14Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Employers also pay Social Security and Medicare
Match their employees tax contributions
Self-employed people pay both the employee and employer contributions
Employee contribution:
$100
Employer contribution:
$100
Employer pays $200 in
payroll taxes to the
federal government
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What is the difference between income tax and payroll tax?
Income Tax Payroll TaxPaid on _______ earned and unearned income
Paid on _________ earned income
Amount ______ depends on many different factors but increases as income increases
A set ____________ of earned income is paid
_________ many different operations and programs of the federal government
Funds the Social Security and Medicare _________________
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 16Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Property Tax
Property tax - a tax on property, such as land, buildings (including homes), and motor vehicles
• __________ of property value
• Amount paid _________ depending upon where you live
• ___________ ownerso _______ to
license car is a property tax
• __________• Expenses of
state and local ___________
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 17Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Sales Tax
Sales tax – tax on purchased goods and services
• A ___________ added to the original price of an item
• $1.00 item charged 6% sales tax = $1.06
• Anyone who __________ an item charged with sales tax
• Some states ________ have sales tax
• __________ of state and local governments
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 18Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Excise Tax
Excise taxes – taxes collected from the seller or retailer and as such often remain ____________ in the price of a produce or service
• Purchase of ________ items:• Gas• Hotel rooms• Airline tickets• Cigarettes• Alcohol
• Often included within the _____ of these items
• Anyone who purchases ___________ items
• Varies by location
• Expenses of state and local governments
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 19Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
How are tax rates determined?
Determined by ______ representatives (city councils, county commissions, state legislatures, Congress)
Elected by _____________
Taxpayers = voters
Work as a voting group to elect representatives who will represent the majority
2.2.2.G1
© Take Charge Today – August 2013 – The Basics of Taxes – Slide 20Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Summary
Without taxes it would be hard to ______ for
many of the benefits of being a member of a
community
Taxes are charged in many _____________
forms
The ___________ of taxes you pay and what you pay those taxes on
will vary depending upon where you live
and your income
Understanding _________ is an
important part of money management