Your Job & Taxes

Starting a New Job To receive a paycheck, an employee must: Complete a Form W-4 Employee’s Withholding Allowance Certificate Determines the amount of money withheld for taxes

Completing a W-4

Form W-4 Allowances Allowance May claim an allowance only if no one else claims that person as a dependent Dependent - person who relies on the taxpayer for financial support Qualifying child Qualifying adult relative Rule of thumb = may (but not required) claim an allowance for every dependent

Starting a New Job Complete a Form I-9 Used to prove the identity of people and avoid hiring non United States citizens Must provide at least 2 of the following passport driver’s license U.S. military card Social Security card birth certificate

Sample Paycheck Stub Terrific Tacos Employee Paycheck, Patty SSN/Employee Identification Number 201-92-4856 Check # 164 Check Amount (net income) $146.68 Employee Address 293 Michael Grove Billings, MT 59102   Pay Type- Gross Income Deductions Current Year-to-date  $180.00 Federal Withholding State Withholding FICA $14.10 $5.45 $13.77 $296.10 $130.80 $330.48 Totals $33.32 $757.38 Pay Period 6/11/2007-6/25/2007

Taxes Deductions from your Paycheck Payroll tax – A tax on earned income that supports the Social Security and Medicare programs (also known as FICA) Income Taxes Federal Largest % State Payroll Taxes Social Security Medicare

Income tax Income tax - tax on earned and unearned income Unearned income - income received from sources other than employment Earned income -money earned from working for pay Example: Wages and salaries earned from employment Example: Interest earned from a savings account

What are benefits of being a part of these tax paying communities? Military for national security ? Roads Libraries Police and fire departments Public schools Recreation (parks, trails)

“You are better off being in a community than by yourself” As a community member you receive many benefits you could not pay for individually Taxes are a way members of a community provide for one another

What is Federal Taxes? Purpose Tax charged 10% of earned income Changes based on your tax bracket Supports Federal Programs Military Education Grants Disasters Research Benefits LINK

What is State Tax? Purpose Tax charged These support State Gov’t. Programs Head Start Med Assistance Programs School Breakfast Pro NE Unemployment Insur. NE Benefits LINK 5.5% of earned income Can changed based on location within the state

What is Social Security? Purpose Tax charged Income for: Retirees People with profound disability Children who have lost a parent A person with children who has experienced the death of a spouse 6.2% of earned income (decreased to 4.2% for 2011-12) Up to an annual maximum

Purpose Tax charged What is Medicare? Helps pay for health care for senior citizens 1.45% of earned income No limit

The form that an employer must send to an employee and the IRS at the end of the year. The W-2 form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck.

"income tax return for single and joint filers with no dependents" 1040EZ Form "income tax return for single and joint filers with no dependents" "easy form" An alternative to the Internal Revenue Service's (IRS) 1040 income tax form offers a faster and easier way to file taxes Meant for taxpayers with very basic tax situations Usually the first tax form filled out

1040EZ cont. In order to be eligible to use this form the individual must have a taxable income of less than $100,000 interest income of $1,500 or less possess no dependents no real estate assets no tax shelters no foreign income