1. 2.2.2.G1 The Basics of Taxes Personal Finance Mrs. Bullock

2. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What are taxes? Taxes – A ________ of money demanded by a government to support the government itself as well as specific facilities or ____________ Paid by taxpayers – A person who ______ a tax to national, state, county or municipal (city/town) _________________________

3. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Community ______________ – a group of people with common interests and concern for the common good United States _______ County City/ town

4. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What are benefits of being a part of these communities? __________ Libraries Military for ________ security __________ _________ Police and fire departments ___________ (parks, trails) ?

5. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona “You are better off being in a community than by yourself” As a __________ member you receive many benefits you could not pay for individually ___________ are a way members of a community provide for one another

6. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona How do taxpayers pay taxes? ________ Tax Payroll Tax ________ Tax Sales Tax ________ Tax

7. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Income tax Income tax - tax on ________ and unearned income Earned income - money earned from working for ______ Unearned income - income received from sources ________ than employment Example: _______ and salaries earned from employment Example: ________ earned from a savings account

8. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Components of income tax Federal income tax State income tax ____________ tax

9. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Federal Income Tax Tax is determined by? Paid by?Helps fund? Earned and unearned income __________ income = _________ tax paid __________ of people living in the U.S. Operations of __________ government Government programs _________ defense of the nation disaster relief

10. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona State Income Tax Tax is determined by? Paid by?Helps fund? Earned and __________ income Higher income = _________ tax paid Those living in states with a ___________ income tax _______ all states have a state income tax __________ by state Examples: State __________ Operations of state government

11. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Payroll Tax Payroll tax – A tax on earned income that supports the Social Security and Medicare programs (also known as FICA) Tax is determined by? Paid by?Helps fund? A set percentage of earned income Deducted out of paycheck (except for self- employed) Individuals who earn income from working for pay Employers Social Security program Medicare program

12. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What is Social Security? PurposeTax charged ______________ for: _________________ People with profound ________________ Children who have lost a parent A person with children who has experienced the death of a spouse ________% of earned income (decreased to 4.2% for 2011-12) Up to an annual _________________

13. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What is Medicare? PurposeTax charged Helps pay for ___________ care for ___________ citizens 1.45% of earned income No ___________

14. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Employers also pay Social Security and Medicare Match their employees tax contributions Self-employed people pay both the employee and employer contributions Employee contribution: $100 Employer contribution: $100 Employer pays $200 in payroll taxes to the federal government

15. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What is the difference between income tax and payroll tax? Income TaxPayroll Tax Paid on _______ earned and unearned income Paid on _________ earned income Amount ______ depends on many different factors but increases as income increases A set ____________ of earned income is paid _________ many different operations and programs of the federal government Funds the Social Security and Medicare _________________

16. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Property Tax Property tax - a tax on property, such as land, buildings (including homes), and motor vehicles Tax is determined by? Paid by whom?Helps fund? __________ of property value Amount paid _________ depending upon where you live ___________ owners o _______ to license car is a property tax __________ Expenses of state and local ___________

17. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Sales Tax Sales tax – tax on purchased goods and services Tax is determined by? Paid by?Helps fund? A ___________ added to the original price of an item $1.00 item charged 6% sales tax = $1.06 Anyone who __________ an item charged with sales tax Some states ________ have sales tax __________ of state and local governments

18. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Excise Tax Excise taxes – taxes collected from the seller or retailer and as such often remain ____________ in the price of a produce or service Tax is determined by? Paid by?Helps fund? Purchase of ________ items: Gas Hotel rooms Airline tickets Cigarettes Alcohol Often included within the _____ of these items Anyone who purchases ___________ items Varies by location Expenses of state and local governments

19. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona How are tax rates determined? Determined by ______ representatives (city councils, county commissions, state legislatures, Congress) Elected by _____________ Taxpayers = voters Work as a voting group to elect representatives who will represent the majority

20. 2.2.2.G1 © Take Charge Today – August 2013 – The Basics of Taxes – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Summary Without taxes it would be hard to ______ for many of the benefits of being a member of a community Taxes are charged in many _____________ forms The ___________ of taxes you pay and what you pay those taxes on will vary depending upon where you live and your income Understanding _________ is an important part of money management