Ch. 7 Income Taxes. 7.1 Tax Tables, Worksheets, and Schedules. Answer the following questions with your group. Who are the taxpayers? What type of taxes Do you pay? Do your parents pay? What does the statement “ Your annual tax changes as your annual income changes ” mean?.
Ch. 7 Income Taxes 7.1 Tax Tables, Worksheets, and Schedules
Answer the following questions with your group • Who are the taxpayers? • What type of taxes • Do you pay? • Do your parents pay? • What does the statement “Your annual tax changes as your annual income changes” mean?
What are the different types of taxes?? • Property tax – taxes based on the property value of the property you own • Houses, condos, business establishments • Sales tax – collected based on the items you buy • Everyone pays these taxes in CA • Some states don’t have sales tax • Income tax – collected based on the taxable income you earn • The tax you pay is the amount you pay the government
Internal Revenue System (IRS) • The IRS is a US government agency that is responsible for the collection and enforcement of taxes • Taxes are reported on a form called a tax return
Filing Status on Tax Returns • Filing status is a description of marital status on the last day of the year • Single – unmarried taxpayers (like you) • Married and Filing Jointly– married people who fill out one tax return together • Qualifying Widow(er) - a widow(er) who meets the qualifications outlined by the IRS • Married Filing Separately – married people who file two separate returns • Head of Household – a filing status for certain unmarried taxpayers who support people in addition to supporting themselves
Example 1 • Ron is single. He is using an IRS tax form and calculates that his taxable income is $51,482. The instructions tell him to use the tax table to determine his taxes. How much does Ron owe in taxes?
Example 2 • Maria and Don are married taxpayers filing a joint return. Their combined taxable income is $153,900. The IRS offers a tax schedule so that taxpayers can calculate their tax. Use the tax schedule below for married taxpayers filing jointly to calculate Maria and Don’s tax.
Check your understanding • Using the table above, what taxable income would yield a tax of exactly $8,962.50?
Example 3 • The IRS includes the tax schedule for information purposes only. For taxable incomes over $100,000, taxpayers must use the tax worksheet. Here is a portion of the worksheet for married taxpayers filing jointly. Calculate Maria and Don’s tax using this worksheet.
Check your understanding • Davida and John have a taxable income of $118,675. Use the Married Filling Jointly worksheet to determine the amounts for columns (a) and (c). What is their calculated tax?
Extend your understanding • Chase has a taxable income of x dollars. This amount is over $100,000, but not over $131,450. Express his tax algebraically.
Ch 7 Asnmt 1 • Pg. 332 #2, 3, 5, 6, 7, 12, 17-19