Taxes and Your Paycheck Career and Financial Management 2.

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Presentation transcript:

Taxes and Your Paycheck Career and Financial Management 2

Payroll taxes are based on employee total earnings. Paid to the gov. by you and your employer. Income taxes – taxes you pay on most types of income you receive. The amount varies, depending on each taxpayer’s financial and family status. FICA (Federal Insurance Contributions Act) tax – contributes to social security and Medicare.

Gross Income is the amount you earn before taxes are withheld. Net Income is the amount you receive after withholdings are subtracted from your gross pay. Your Paycheck Stub

W-4 form provides your employer with information needed to determine the proper amount to withhold from your paycheck. An allowance is a number that reduces the amount of $ withheld from pay.

File a Tax Return Tax return is a set of forms at tax payers use to calculate their tax obligations. –Must be submitted every year by April 15th Income – wages, tips, interest on savings.

Sources of Information for tax returns W-2 – summary of yearly earnings and withholdings from a job. Form 1099-INT – statement of the interest your bank paid on your savings that year.

Completing a tax form Adjusted gross income – total income before subtracting any deductions or exemptions. Taxable income – income after you have subtracted all exemptions and deductions out from adjusted gross income.