Consumer Taxation. Learning Objectives  Identify the major types of consumer taxation.  Compute gross and net pay.  Complete personal income tax forms.

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Presentation transcript:

Consumer Taxation

Learning Objectives  Identify the major types of consumer taxation.  Compute gross and net pay.  Complete personal income tax forms.

Types of Consumer Taxation

Personal Property Tax Includes things like real estate and motor vehicles Main tax supporting:  public education  emergency services  local government Assessed as a percentage of the current value of the property

Income Tax Imposed on earned income by the federal government and by most state & local governments Amount pays depends on their tax bracket More money earned = higher percentage paid in taxes

Sales Tax Consumption tax charged at the point of purchase for certain goods & services In Virginia, sales tax is usually six percent Sales tax in restaurants may very by county (local government)

FICA Refers to social security and Medicare taxes paid by individuals and employers Usually 7.65% of the employee’s gross pay Employer will match with another 7.65%

Understanding Your Paycheck

When You Get Paid…  Gross Pay: wages & salary  Deductions : federal taxes, state taxes, FICA, and other optional deductions  Optional deductions include things like health insurance, retirement, etc.  Net Pay: take-home pay  Calculated by subtracting deductions from gross pay

Income Forms

Form W-4 Completed every time you start a new job Determines how much you will pay in taxes each paycheck If you claim zero, the highest amount of taxes will be withheld from your paycheck.

Form W-2 Federal tax form issued by employers that states how much an employee was paid in a given year Real World Business Chicago, IL Irma Money 2301 South Jackson Chicago, IL , , , ILIL , D

Forms for Filing Taxes

1040 EZ Use this form if… Income is less than $100,000 Filing as single or married Under age of 65 No dependents

1099 Used to report taxable income, such as: Interest Dividends Stock sales

Ways to File Your Taxes

Filing Your Tax Return In the past, you would prepare your taxes and send your complete package in to the Internal Revenue Service (IRS). Most people now use TurboTax to prepare their taxes and then e-file online with the IRS.

Activity Let’s do our taxes!