Chapter 2 Income, Benefits, and Taxes

Slide 2 What Are the Sources of Earned Income? 2-1 Earned Income and Benefits A wage is pay for each hour worked. o Minimum wage – lowest rate by law o Overtime – 1½ times regular rate A salary is pay for each month or year worked. A tip is a gift of money for a service. A commission is a set fee or percentage of a sale.

Slide 3 Minimum Wage Laws 2-1 Earned Income and Benefits

Slide 4 What Is Self-Employment? 2-1 Earned Income and Benefits Self-employment is working for yourself. An entrepreneur is someone who is self- employed and owns a business. o Lifestyle businesses o Venture businesses

Slide 5 What Are Employee Benefits? 2-1 Earned Income and Benefits Benefits are forms of pay other than salary or wages. Pay without work Education Perks Insurance/HSAs Retirement plans Profit-sharing plans Stock option plans

Slide 6 Success Skills Teamwork Set clear goals and create a plan. Define the duties of each team member. Identify how success will be measured. Identify problems the team may face. Have regular meetings. Build on the strengths of team members. Recognize accomplishments. 2-1 Earned Income and Benefits

Slide 7 What Is Unearned Income? 2-2 Unearned Income and Benefits Earned IncomeUnearned IncomeVariable Income Salaries and wagesInterestBusiness profits TipsDividendsRents CommissionsCapital gainsRoyalties BonusesGambling winningsFarm Income Professional feesAlimony Social security benefits Pensions Annuities Unemployment compensation

Slide 8 What Type of Taxes Do You Pay? 2-2 Unearned Income and Benefits Taxes are based on consumption, income, and wealth. Direct taxes are paid directly to the government. o Examples: income and property taxes Indirect taxes are charged on goods or services bought by the consumer. o Examples: use, excise, and sales taxes

Slide 9 How Do You Benefit from Paying Taxes? Direct benefits o Examples: social security, police, national parks 2-2 Unearned Income and Benefits Indirect benefits o Examples: public education for citizens, free vaccines

Slide 10 Building Communications Skills 2-2 Unearned Income and Benefits Critical Listening Evaluate the information you hear. Consider only important or relevant information. Make good decisions based on what is accurate and useful.

Slide 11 Focus On... Social Security Benefits 2-2 Unearned Income and Benefits Workers pay into the social security fund through payroll deductions. A social security number is assigned to each person. Employers match the payments. Upon retirement, workers receive a monthly benefit check.

Slide 12 What Are Paycheck Deductions? A deduction is money withheld from a paycheck. o Required deduction examples: income tax, social security tax, Medicare tax o Optional deduction examples: health insurance, savings plan Gross pay is total salary or wages. Net pay is gross pay minus deductions. 2-3 Taxes and Other Deductions

Slide 13 What Tax Forms Must Be Filed? 2-3 Taxes and Other Deductions W-2 – reports a worker’s taxable income for the year 1040EZ – a tax return for filers with no dependents or itemized deductions 1040A – a tax return that allows more options for income and deductions 1099-INT – reports interest earned

Slide 14 Form W Taxes and Other Deductions

Slide 15 E-Filing 2-3 Taxes and Other Deductions It is a fast and safe way to file a tax return. You can e-file yourself or hire an authorized e-file provider. Those who meet adjusted gross income requirements can e-file free. Refunds are often received much quicker.

Slide 16 Focus On... Workplace safety is the law. It reduces accidents or injuries. It benefits both workers and the company. All workers must make safety a priority. An emergency plan should be in writing and shared with everyone. 2-3 Taxes and Other Deductions Workplace Safety