University of new haven professional enrichment program
Download
1 / 22

University of New Haven - PowerPoint PPT Presentation


  • 236 Views
  • Uploaded on

University of New Haven Professional Enrichment Program. Who's FICA, and How Come He Gets Part of My Paycheck?. Paul A. Caiafa, CPA, MST April 26, 2007. My Objectives. Explain a progressive tax system.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'University of New Haven' - Sharon_Dale


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
University of new haven professional enrichment program l.jpg

University of New HavenProfessional Enrichment Program

Who's FICA, and How Come He Gets Part of My Paycheck?

Paul A. Caiafa, CPA, MST

April 26, 2007


Slide2 l.jpg

My Objectives

  • Explain a progressive tax system.

  • Identify and explain the withholding of federal income tax, state income tax, Social Security tax, and Medicare tax.

  • Explain the meaning of deductions, exemptions, and allowances, and the purpose of Form W-4.

  • Explain the meaning and purpose of Form W-2.

  • Identify the forms used to complete a federal income tax return and Connecticut state income tax return.

  • Calculate federal income tax, state income tax, Social Security tax, and Medicare tax withheld, exemption amounts, itemized deductions, and federal and state income tax due.


Your paycheck l.jpg
Your Paycheck

  • Federal Income Taxes

  • Social Security Taxes

  • Medicare Taxes

  • State Income Taxes


Tax filing forms l.jpg
Tax Filing Forms

  • Federal W-4

  • CT W-4

  • Federal Form 1040-EZ

  • Federal Form 1040 and Schedule A

  • Connecticut Form CT-1040


Slide14 l.jpg

Ray is single and lives in Connecticut. He earned $95,000 during 2006 working for a CPA firm.

1. Determine the amount reported on Ray’s W-2 that was withheld for Social Security and Medicare.

Social Security: $94,200 x 6.2% = $5,840.40

Medicare: $95,000 x 1.45% = $1,377.50

2. Determine the amount of Social Security tax and Medicare tax paid by Ray’s employer on his behalf.

Social Security: $94,200 x 6.2% = $5,840.40

Medicare: $95,000 x 1.45% = $1,377.50


Slide15 l.jpg

3. Determine the number of exemptions Ray can claim by completing Form W-4, and the amount Ray can deduct from his gross income.

1 exemption (himself) x $3,300 = $3,300

4. Based on the number of exemptions Ray can claim, and the amount he can deduct from gross income in arriving at taxable income, what amount will be used to determine the amount of federal income taxes to be withheld?

($95,000 - $3,300) = $91,700


Slide16 l.jpg

5. Determine the amount reported on Ray’s W-2 that was completing Form W-4, and the amount Ray can deduct from his gross income.withheld for federal income taxes.

From - To Taxable Amount Tax Rate Tax

$ – $7,300 $7,300 10% $730

$7,301 - $29,700 $22,400 15% $3,360

$29,701 - $71,950 $42,250 25% $10,562

$71,951 - $91,700 $19,749 28% $5,530

Total $20,182

$20,182 (based on taxable income of $91,700)


Slide17 l.jpg

6. If Ray claimed completing Form W-4, and the amount Ray can deduct from his gross income.zero exemptions on his W-4 – versus one – what amount would have been reported on his W-2 for federal income taxes withheld?

From - To Taxable Amount Tax Rate Tax

$ – $7,300 $7,300 10% $730

$7,301 - $29,700 $22,400 15% $3,360

$29,701 - $71,950 $42,250 25% $10,562

$71,951 - $95,000 $23,050 28% $6,454

Total $21,106

$21,106 (based on taxable income of $95,000)


Slide18 l.jpg

7. Ray works in Connecticut, which calculates state income tax using gross income.

Determine the amount reported on his W-2 that was withheld for Connecticut state income taxes.

$95,000 x 5% = $4,750

8. If Ray paid $10,000 in interest on his home mortgage, what amount could he deduct from income by completing Schedule A?

$10,000 interest expense + $4,750 state income tax = $14,750


Slide19 l.jpg

9. If Ray did not pay interest on his home mortgage, what amount could he deduct from income?

The standard amount for single taxpayers: $5,150

10. Calculate Ray’s taxable income, assuming his itemized deductions on Schedule A total $14,750, and he claims one exemption.

$95,000 salary - $3,300 exemption - $14,750 itemized deductions = $76,950


Slide20 l.jpg

11. Calculate Ray’s federal income tax. amount could he deduct from income?

From - To Taxable Amount Tax Rate Tax

$ – $7,300 $7,300 10% $730

$7,301 - $29,700 $22,400 15% $3,360

$29,701 - $71,950 $42,250 25% $10,562

$71,951 - $76,950 $4,999 28% $1,400

Total $16,052

$16,052 (based on taxable income of $76,950)


Slide21 l.jpg

12. Does Ray owe additional taxes or is he entitled to a refund?

Ray will receive a refund of $4,130: Tax withheld $20,182 (#5), less tax owed $16,052 (#11).



ad