Your Paycheck And What it Means

Death and Taxes Benjamin Franklin: “In this world nothing can be said to be certain but death and taxes.”

Why pay taxes? 1. Protection – Army, police, social programs, hospitals 2. Infrastructure- bridges, roads, utilities, buildings, parks 3. Government – lawmakers, courts, 4. Research- NASA, Medical, Science, CATO 5. Education – colleges, schools, etc.

FICA What is FICA tax? (Federal Insurance Contribution Act) FICA Provides benefits for retired workers and their dependents as well as for disabled workers and their dependents. What is Medicare tax? Government service that helps provide healthcare for senior citizens and disabled U.S. citizens. Who has to pay FICA/Medicare tax? All employees except for the following: 1.) Any working student registered and attending classes worth 6 (six) or more credit hours 2.) Qualifying Nonresident Alien employees under tax treaty. How are FICA and Medicare tax calculated? FICA is 4.2% of Taxable Gross for employees and 6.2% for employers. Medicare is 1.45% of Taxable Gross

Social Security What is Social Security? Money collected through Social Security is used to help American citizens who are no longer able to work due to a disability, the death of a parent, or reaching retirement age. It also goes towards a system known as Medicare, which offers health benefits to qualifying individuals. The tax rate may change from year to year, depending on the need of beneficiaries, and the tax is deducted by the employer from an employee's paycheck each pay period. Medicaretax rate What is the Social Security Rate? The Social Security tax rate for 2012 will revert back to its normal rate of 6.2% for employees or 12.4% for self-employed persons.self-employed persons

Federal Income Taxes They are collected according to a tax table created by the federal government based upon yearly estimated income These taxes are solely based upon a net taxable income- the gross income minus deductions. They are collected at each pay period in an estimated format and assessed at the end of each year to determine liability.

State Income Taxes Purpose of State Taxes – supplement federal funding used within the state. : to support education within the state : to support police and corrections : to support state government : to support state run programs

State Income Taxes They are collected according to a tax rate determined by the state but based upon net federal taxable income based upon yearly estimated income They are collected at each pay period at a rate chosen by the taxpayer and assessed at the end of each year to determine liability.