1. Where did all that money go?

2.  Objectives: ◦ Understand payroll taxes and withholdings. ◦ Be able to analyze a paycheck stub and W-4.

3.  Payroll Taxes – taxes based on the payroll of a business ◦ Payroll taxes are paid by both the employer and employee ◦ Included income taxes and social insurance taxes  Income taxes ◦ Taxes you pay on most types of incomes.  Interest, profit from investments, dividends ◦ April 17 th deadline ◦ Only two sure things in this world?

4.  Federal Withholding  FICA (Federal Insurance Contributions Act) ◦ Law requires workers to contribute to social security and Medicare.  social security  6.2% up to 117,000 salary for employees  6.2% for employers  Medicare (1.45%)  State Tax  Local Tax  Local Services Tax ($52 a year)  Unemployment Tax

5.  Withholding – money withheld from your paycheck goes to prepay your federal income tax and social insurances.

6.  Gross Income – Amount before taxes are taken out. High number.  Net Income – Amount you receive after withholdings are subtracted from your gross paid.  Stub should show itemized deductions (taxes, payroll, insurance, retirement)

8.  Provides the information your employer needs to determine the proper amount to withhold from you paycheck.  If the information is wrong you are responsible for the payments.  IRS will come knocking.

9.  Allowances – A number that reduces the amount of money withheld from your pay. ◦ More allowances the less you pay in taxes. ◦ Children and spouse

10.  W-4 Link W-4 Link

11.  Too Much – You do not get interest on the money. Interest free loan to the government. ◦ Nice refund check at the end of the year  Too Little – Possible large tax bill or fine. Interest free loan from the government. ◦ How does this happen?  Having a side job  Claiming more allowances  Interest

12.  Tax Return- set of forms that taxpayers use to calculate their tax obligation.  Calculate if you paid too much or not enough taxes throughout the year.  Income ◦ Wages ◦ Tips ◦ Interest ◦ Dividends ◦ Stock profits

13.  W-2 W-2 ◦ Summary of your earnings and withholding for the year for a job ◦ Sent in with your tax return ◦ Employer send theirs in also  1099-Int 1099-Int ◦ Statement of interest your bank paid you

14.  Form 1040EZ (Simplest form to report)1040EZ ◦ Criteria  Single or married filling jointly  You have no dependents  Under the age of 65  You are not blind  Taxable income is less than $100,000  You earned no more than $1,500 in interest  No other income than wages, interest, tips, scholarships, or unemployment.

15.  Sales Tax – Taxes added to the price of goods and services at the time of purchase (PA 6%, DE None)  Property Tax – taxes on the value of real estate property. (School, county)  Excise Tax – Specific goods and services (Tobacco, gas, hotels)  Estate Tax- Property which will be received by those legally entitled to the estate.

16.  Gift Tax- Tax on a give more than $10,000  Business Tax – Paid to operate a certain kind of business (Garbage)  Corporate Tax – 15 to 35 percent on profit. ◦ Graduated Scale ◦ Most levels are in the 33 to 35 % range