1. What special day is it?

2. What happened to my paycheck???

3. Lets see what happens to our income  $60,000/year  $5,000/month  $2,500/pay period (every other week)  How much will we actually take home??

4. Step One: The Payroll Tax Step One: The Payroll Tax Payroll Tax Rates Social Security tax rate 6.20% Medicare tax rate1.45% Total payroll taxes7.65% $4500/year $191.25/pay period $2308.75 NEW PAY

5. The Payroll Tax: Purpose Social Security Tax FICA (Federal Insurance Contributions Act) Benefits for: the dependents of retired workers And for the disabled and their dependents Medicare Tax Medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.

6. Step 2: Federal Income Tax

7. Progressive Tax Tax rate 25% 15,000/year; $625/paycheck DOWN TO $1683/paycheck

8. Federal income taxes: Purpose 1. national defense, veterans, and foreign affairs 2. social programs 3. law enforcement 4. interest on the national debt

9. Step 3: State Taxes! Progressive Tax Tax Bracket (Single) [2] [2] Tax Bracket (Couple) [3] [3] Marginal Tax Rate $0+ 1.40% $20,000+ 1.75% $35,000+$70,000+3.50% $40,000+$80,000+5.53% $75,000+$150,000+6.37% $500,000+ 8.97% $3318/year $138.25/pay period FINAL PAY: $1544.75

10. How much we actually make? Gross Pay - Social Security taxes - Social Security taxes - Medicare taxes - Medicare taxes - Federal Income tax withheld - Federal Income tax withheld - State income tax - Misc: Retirement, Healthcare, dues, et cetera ________________________________ - Misc: Retirement, Healthcare, dues, et cetera ________________________________ Net Pay

11. How much do we actually make??  $60,000/year GROSS  is actually $37,182/year NET That does not account for other deductions…That is only taxes!!   Insurance Deductions: health, dental and life insurance.   Retirement Plan Contributions:.

12. Can we get any of that money back?

13. Fill out your W-4s  Was it easy?  What is the purpose of this form?  determines how much federal income tax to withhold  Is that weird?  You can manipulate the amount you want withheld since more than your tax bracket impacts how much you pay in taxes

14. The W4  Filling out the W-4 Depends on 1. the employee's marital status, children, dependents 2. any additional amount the employee wants to withhold 3. any exemptions from withholding that the employee claims.  More allowances = less taxes are taken out of paycheck; Less allowances = less money taken out Why???? Why???? http://apps.irs.gov/app/withholdingcalculator/ http://apps.irs.gov/app/withholdingcalculator/ http://apps.irs.gov/app/withholdingcalculator/ IRS withholding calculator IRS withholding calculator

15. Lets fill it out again…  Single, no children, no one else can claim you

16. Altering your taxes  Why would you want to increase your allowances?  Why would you want to decrease your allowances?  Is there a “PERFECT” way to fill out this form?

17. What is next???

19.  http://www.irs.gov/app/understandingTaxe s/hows/mod01/sim_mod01_01.jsp http://www.irs.gov/app/understandingTaxe s/hows/mod01/sim_mod01_01.jsp http://www.irs.gov/app/understandingTaxe s/hows/mod01/sim_mod01_01.jsp

20. What do you need to complete your taxes?

21. Tax Time!!!!  Tabulate your gross income W2 FORMS W2 FORMS Interest earnings Interest earnings Bonuses/ tips Bonuses/ tips Dividends Dividends Any other income! Any other income!

22. What is an exemption? A way to “adjusting/decrease” your Gross Income  Charity  Student loan interest  Moving expenses-work When you are done reducing your gross income, you have an:  Adjusted gross income

23. Full List Deductions   IRA Deduction   Archer MSA Deduction   Health Savings Account Deduction (see the Instructions for Form 8889)Form 8889   Student Loan Interest Deduction   Moving Expenses   Self-Employed Health Insurance Deduction   Self-Employed SEP, SIMPLE, and Qualified Plans   Penalty for early withdrawal of Savings   Scholarship and Fellowship Grants excluded from income   Domestic Production Activities Deduction

24. What form do I use?  1040 EZ: standard deduction  1/3: itemize: 1040 (schedule A)