What Are Taxes Taxes are required contributions to national and state revenue, levied by the government on personal income and business profits Added to the cost of some goods, services, and transactions.

What is our tax money used for? Armed Services Defense Retirement for Elderly Roads Education Social Programs: Welfare Bridges Law Enforcement Research Community Development Interest on National Debt

Penalty for Non Payment of Taxes IRS adds 5% to owed amount each month you don’t pay Property can be seized to pay tax bill Jail time

State & Federal Income Tax Progressive Tax: percentage increases as income increases United States operates on an ongoing payment system Taxes are immediately paid on income and held for taxpayer Filing deadline April 15th

If taxable income is over Progressive Tax If taxable income is over But not over The tax is: $0 $7,550 10% of the amount over $0 $30,650 $7,55 plus 15% of the amount over $7,550 $74,200 $4,220 plus 25% of the amount over $74,200 $154,800 $15,107.50 plus 28% of the amount over $74,200 $336,550 $37,675.50 plus 33% of the amount over $154,800 $336,6550 No limit $97,653 plus 35% of the amount over $336,550

Social Security The Social Security tax is also called the FICA (Federal Insurance Contributions Act) tax. Social Security is a Regressive Tax: percentage stays the same for all incomes or may even decrease. Tax rate is 6.2% Social Security taxes provide the following benefits for employees and their dependents: • retirement benefits • benefits for the dependents of retired workers • benefits for the disabled and their dependents

Medicare The Medicare tax is used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers spouses of workers Regressive Tax Tax rate is 1.45% Irs.gov resource slides

Other Taxes Sales Tax Property Tax Gasoline Tax Local/City Tax

Tax Costs Calculate the real cost of these items If a CD costs $15.00 and the tax is 7.5%, what is the final cost? You and your friends receive a lunch bill for $22.50 before tax is included. The tax in your state is 8%. What is the total cost when the tax is included? The class trip is going to cost each of the fifty students $130.00. If tax is 5%, what is the total cost for the entire class? Which would cost more…a pair of earrings priced at $28.00 with a 7% tax, or a set of posters at $29.00 with a 5.5% tax? $16.13 $24.30 $6,825 The Center for Applied Research in Education 1996 Posters $.64 resource slides

Tax Forms W-4 I-9 W-2 1040EZ Utah State Tax Form

W4 W-4 determine the % of gross pay which will be withheld for taxes

I-9 I_9 Needs 2 forms of identification: drivers license, passport, social security card, or birth certificate

W-2 How much money was earned during precious year How much money was paid in taxes during the previous year

Steps to Completing a Form W-4 Print or type legal name on Line 1 and home address directly below the name Write social security number on Line 2 On Line 3, check the appropriate box to indicate marital status Enter a zero on Line 5 if not claiming any allowances Sign name and date the form before giving it to the employer Keep a copy for personal records

1040 EZ As a class, walk through the steps of completing the 1040 EZ tax form. Printable from www.irs.gov

Utah State Tax

These simulations provided by the IRS are interactive and basic These simulations provided by the IRS are interactive and basic. They allow students to apply the concepts they have learned about taxation. Simulations

W4