Unit Nine Taxes

 The student will demonstrate knowledge of taxes by describing the types and purposes of local, state, and federal taxes and the way each is levied and used Unit 9-Target A

 The federal government provides goods and services from military defense and the interstate highway system to the administration of domestic programs and agencies. Most federal tax revenue comes from personal income taxes and payroll taxes. What types of goods and services does the federal government provide, and what are the sources of its revenue?

 Most state and local government revenue comes from sales taxes, grants from the federal government, personal income taxes, and property taxes. The bulk of state and local government revenue is spent for education, public welfare, road construction and repair, and public safety. What types of goods and services do state governments provide, and what are the sources of their revenue?

 FICA  Flat  Inheritance  Personal property  Progressive  Proportional  Real estate  Regressive  Sales  Social Security. Types of taxes:

 The student will demonstrate knowledge of taxes by exploring how tax structures affect consumers, producers, and business owners differently Unit 9-Target B

 Tax structures may be progressive, regressive, or proportional.  A progressive tax system is one in which the tax rate rises as a taxpayer’s income rises. Income tax is a progressive tax.  A proportional tax is one in which the same tax rate is paid by people at all income levels. Property tax is a proportional tax. What are the different tax structures?

 Taxes are regressive when taxpayers who earn lower incomes pay a higher percentage of their income than those who earn higher incomes. Sales tax is a regressive tax. How does each tax structure affect consumers, producers, and business owners?

 The student will demonstrate knowledge of taxes by computing local taxes on products and services Unit 9-Target C

 Sales taxes are collected on the sale of most goods and services. What is sales tax?

Sales Tax

 A base sales tax may be established by a state, and a locality may add additional sales taxes (e.g., meals tax). Why might sales tax vary from one locality to another?

 The student will demonstrate knowledge of taxes by examining potential tax deductions and credits on a tax return. Unit 9-Target D

 A tax deduction is a reduction in one’s taxable income. Some examples of tax deductions include  local taxes paid  student loans  charitable contributions  interest paid on home mortgage.  A tax credit is a reduction of the tax itself. Tax credits may result from the purchase of, for example, energy- saving vehicles and appliances. What is the difference between a tax deduction and a tax credit?

 The student will demonstrate knowledge of taxes by explaining the content and purpose of a standard W-2 form. Unit 9-Target E

 The W-2 form is issued by employers and is an end-of-year summary of one’s gross taxable income and withholdings.  It is required by the Internal Revenue Service and included when individuals file their income tax returns. What is a W-2 form?

 The student will demonstrate knowledge of taxes by explaining the similarities and differences between state and federal taxation of inheritances. Unit 9-Target F

 What are some methods of estate planning?  What are some of the questions answered by estate planning?  What is the difference between an estate tax and an inheritance tax? Essential Questions

 Estate planning involves decisions regarding wills, trusts, and joint tenancy and seeks to accomplish the following:  To state how a person wants his or her estate distributed after death  To appoint the person who should distribute the estate  To record other information, such as one's wishes regarding care of minor children  To avoid probate, or to reduce taxes or other costs. Estate planning

 Current state and federal taxes must be considered when planning an estate (e.g., estate taxes, inheritance taxes, death taxes, gift taxes, federal/state income taxes) and any deductions and exemptions that apply to such taxes.  Estates exceeding the exempt amount are taxed by the federal government. The tax applies to the decedent’s gross estate, with a large portion of the estate exempted by a tax credit. Estate Taxes

 Inheritance tax is levied on gifts and bequests received by a taxpayer. Currently there is no federal inheritance tax in the United States, but several states have inheritance taxes. Taxes vary based on the property inherited and the relationship of the inheritor to the decedent. Inheritance

End of Unit 9 Test at our next class meeting