Taxes are what we pay for civilized society oliver wendell holmes jr 1904
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TAXES. “Taxes are what we pay for civilized society” Oliver Wendell Holmes Jr., 1904. Essential Questions. Are taxes necessary in society? How does the government collect taxes from its citizens? How do taxes impact our lives

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“Taxes are what we pay for civilized society” Oliver Wendell Holmes Jr., 1904

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Taxes are what we pay for civilized society oliver wendell holmes jr 1904

TAXES

“Taxes are what we pay for civilized society” Oliver Wendell Holmes Jr., 1904

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: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.


Government taxes where it goes

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%


Taxes fund public goods and services

Taxes Fund Public Goods and Services

Health Care for Elderly

National Defense

Social Services

State and Local Police

Public Education

Financial Aid


Taxes are what we pay for civilized society oliver wendell holmes jr 1904

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)


Property taxes

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


Federal state income taxes

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


2011 tax brackets

2011 Tax Brackets


Taxes are what we pay for civilized society oliver wendell holmes jr 1904

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


Pay as you go withholding

Pay-As-You-Go Withholding

  • Taxes are paid as income is earned

  • Taxes are withheld based on Form W-4 information


Taxes are what we pay for civilized society oliver wendell holmes jr 1904

  • 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


Taxes are what we pay for civilized society oliver wendell holmes jr 1904

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

  • 2. 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


Taxes are what we pay for civilized society oliver wendell holmes jr 1904

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.


Taxes are what we pay for civilized society oliver wendell holmes jr 1904

What happens to my money??

About 1/3rd of more of your paycheck will go to taxes

Taxes are immediately paid on income earned

http://www.bankrate.com/calculators/tax-planning/hourly-paycheck-tax-calculator.aspx


Paycheck stub

Document included each pay period which outlines deductions

Paycheck Stub


Form w 2

Form W-2

  • Shows how much employees earn

  • Copy must be attached to tax return


Tax avoidance versus tax evasion

Tax Avoidance versus Tax Evasion

Tax Avoidance: Legal means of decreasing your tax bill

Tax Evasion: Failure to pay legally due taxes


Tax breaks

Tax Breaks

Deductions:

Reduce income

subject to tax

Exemptions:

Part of income

that isn’t taxed

Credits:

Dollar for dollar

reduction in tax


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