1. TAXES Are taxes necessary in society? How do taxes impact our lives
Essential Questions
Are taxes necessary in society?
How does the government collect taxes from its citizens?
How do taxes impact our lives
(Tax, income tax, sales tax, property tax, W-2, W-4, I-9, 1040 EZ,
IRS, tax bracket, payroll deductions, tax evasion, tax avoidance,
tax deductible, tax credit, dependent, allowance)
“Taxes are what we pay for civilized society” Oliver Wendell Holmes Jr., 1904
Taxes are a necessary part of life in the United States.
Although taxation has often received a less than favorable review by
taxpayers, the benefits of taxation are positive.
What do you think is meant by this quote? Do you agree with it?
(Answers will vary.)

2. Taxes: Required charges imposed on citizens by local, state, &
federal governments.
Used to provide public goods and services.
Sales Tax: Tax on sale of items - (regressive)
Income Tax: Tax on earnings - (progressive)
Property Tax: Tax on property (Ex. land, cars)
Capital Gains Tax: Tax on sale of assets (Ex. stocks)
Gift Tax: Tax collected on money/property valued over $11,000
Estate Tax: Fed. tax on value of someone’s property upon death
Internal Revenue Service (IRS): Collects federal taxes
Enforces tax laws written by US Congress.

3. Government Taxes Where it goes
Surplus to Pay Down
the Debt 6%
Law Enforcement and General Government 2%
Social Security, Medicare and
other Retirement
36%
Where it comes from
Social Programs
18%
National Defense,
Veterans and
Foreign Affairs
18%
Personal
Income Taxes
50%
Community Development
10%
Interest on
the Debt,
10%
SS, Med,
& unemployment
35%
Excise, customs, estate, gift, and miscellaneous Taxes 8%
Corporate
Income Taxes 7%

4. Taxes Fund Public Goods and Services
Health Care for Elderly
National Defense
Social Services
State and Local Police
Public Education
Financial Aid

5. Sales Tax
A sales tax is a tax, usually paid by the consumer at the point of purchase for certain goods and services. % of value
* Dif. states & cities have different tax rates that vary depending on item
Excise Tax: applied to select group of products like gas
Alcohol & tobacco (sin tax)

7. Property Taxes Levied on property, especially real estate
- If value of property goes up, so does tax
Can also be levied on cars, boats, RVs
Fund schools, local services, welfare programs

8. Federal & State Income Taxes
Come from earned and unearned income (1099 Form)
Levied on individuals and corporations
Support federal & state expenses, education programs, welfare, national defense, police & fire, roads…
The more you make, the higher percentage you pay

9. Married filing jointly or qualifying widow/widower
2011 Tax Brackets
Tax rate
Single filers
Married filing jointly or qualifying widow/widower
10%
Up to $8,500
Up to $17,000
15%
$8,501 - $34,500
$17,001 - $69,000
25%
$34,501 - $83,600
$69,001 - $139,350
28%
$83,601 - $174,400
$139,351 - $212,300
33%
$174,401 - $379,150
$212,301 - $379,150
35%
$379,151 or more

11. I have a job, now what????
W-4
1. Complete a W-4 Form (Employee’s Withholding Allowance Certificate)
Used to determine the amount of federal taxes withheld from the paycheck
Claim how many dependents you have
The more allowances you have, the more of your paycheck you may keep
(allowances or dependents allow you to keep more of your money = pay less tax)
Dependent: Person who relies on the taxpayer for financial support

12. Pay-As-You-Go Withholding
Taxes are paid as income is earned
Taxes are withheld based on Form W-4 information

13. 2. Complete an I-9 Form (Employment Eligibility Verification)
Employment Eligibility Verification Form
Used to verify the eligibility of individuals to avoid hiring undocumented workers or others who are not eligible to work in the United States
Must provide documentation which establishes identity and employment eligibility
Examples include driver’s license, passport, Social Security card, and birth certificate

14. Ways you may be paid
Paycheck: Check for salary or wages made out to an employee
Employee must deposit/cash check
Check and paystub given to employee
Direct Deposit: Electronic transfer of an employee paycheck by
an employer
Automatically puts paycheck into employee designated account
Paystub may be given or accessed electronically
Secure & quick

15. Employee Pay How often you are paid? Pay Period : Weekly: 52 per year
Bi-weekly: 26 per year
Semi-Monthly: 24 per year
Monthly: 12 per year
How are people paid?
Hourly: based on # hours in period
Overtime: Hours worked beyond the regular work week.
Salary: Fixed amount paid each pay period regardless of hours worked.
Commission: Amount made based on percentage of employee sales.
Standard workday: 8 hours
Standard work week: 40 hours.

16. What happens to my money??
About 1/3rd of more of your paycheck will go to taxes
Taxes are immediately paid on income earned
Your Paycheck
Percent
Multiply by
Federal Income Tax
10%-35%
.1-.35
State Income Tax
1%-6%
Social Security Tax
6.20%
.062
Medicare Tax
1.45%
.0145
TOTAL
18.45% %

17. Paycheck Stub
Employee Beakens, Joe
SSN
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Gross Pay
Deductions
Current
Year-to-date
 $1,353.33
Federal Withholding State Withholding Social Security
Medicare Medical 401K
$ $40.82 $83.91 $19.62 $0.00 $0.00
$ $ $ $ $0.00 $0.00
Totals
$250.35
$1,502.10
Pay Period 6/11/2004-7/11/2004
Document included each pay period which outlines deductions

18. Form W-2 Shows how much employees earn
Copy must be attached to tax return

19. Tax Avoidance versus Tax Evasion
Tax Avoidance: Legal means of decreasing your tax bill
Tax Evasion: Failure to pay legally due taxes

20. Tax Breaks Deductions: Reduce income subject to tax Exemptions:
Part of income
that isn’t taxed
Credits:
Dollar for dollar
reduction in tax