Vocabulary (Ch. 6.1 - 6.2)
Definition: Taxes you pay to the government and are based on the amount of money that you earn
Income Tax
Definition: A form of payment to employees for their work, usually handled by someone who works in payroll
Paycheck
You earn $19.00 per hour at your job. Your manager says they need you to work 80 hours over the next 2 weeks. You receive your paycheck at the end of the 2-weeks and notice some money has been withheld to help pay for Medicare.
What is the total amount deducted off your 2-week paycheck for Medicare? (Assume 1.45% is taken out for Medicare)
Medicare = $22.04
$19.00 per hour (x) 40 hours (x) 2 weeks = $1,520
$1,520 (x) 0.0145 = $22.04
Your dad works and earns $74,000 per year. Your dad gets paid every month and works a total of 160 hours in a pay period. Assuming he works 2,000 hours annually, what amount will be deducted off his monthly paycheck for Social Security? (Assume 6.20% is taken out for Social Security.)
Social Security = $367.04
Step 1: How much does he make per hour? ($74,000 ÷ $2,000 = $37 per hour)
Step 2: How much does he make per month? ($37 per hour ⋅ 160 hours = $5,920)
Step 3: How much does he owe in Social Security for the month? ($5,920 ⋅ 0.062 = $367.04)
What is the fastest fish in the ocean?
A) Marlin
B) Dolphin
C) Tiger Shark
D) Sailfish
D) Sailfish
(*They can travel over 68 mph)
Definition: A government agency that collects federal taxes
Internal Revenue Service (IRS)
Definition: A form used to report income and tax data; this is used to compute federal, state, and local income taxes
Form W-2
For 2024, your parents are filing a joint tax return (Married Filing Jointly). Together they had an adjustable gross income of $125,000. They have the following deductions to apply:
Standard Deduction: $29,200
Itemized Deductions: $31,400
Question #1: What will your parents taxable income be after they take the deduction? Question #2: After the deduction, will your parents drop to a lower tax bracket (%)?
(Tax Brackets - 2024) https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets
Question #1: Taxable Income = $93,600
*You CANNOT take both the Standard and Itemized Deduction. You must choose the greater amount between the two to take off from your Gross Income.
$125,000 (-) the greater of the two deductions ($31,400) = $93,600
Question #2: Yes!
They'll go from paying 22% to 12% after applying the deduction.
Let's pretend you're 22 years old and you're filing taxes. You earn $12,000 annually and you want to use a list of expenses to lower your Federal Income Tax. This is called "Itemized Deductions." The list of your expenses is as follows:
Education Expenses: $2,200
Medical Expenses: $1,300
Home Mortgage Interest: $3,800
If you're allowed to deduct up to a maximum of $2,000 for education, any amount in excess of 7.5% of your Income for medical expenses, and up to $375,000 for interest on your home mortgage, how much can you claim on your "Itemized Deductions?"
Itemized Deductions = $6,200
Education Expenses = $2,000 max.
Medical Expenses = ($12,000 ⋅ 0.075) = $900. That's $400 in excess of the $1,300 you spent
Home Mortgage Interest = $3,800
$2,000 + $400 + $3,800 = $6,200
In the latest version of Mario Kart, how many different racers can you choose to play as (including the DLC's)?
A) 24
B) 32
C) 50
D) 70
Definition: Filing status for unmarried taxpayers who support other people besides themselves and their own children
Head of Household
Definition: A form sent to taxpayers that is used to report other income made from interest on bank accounts, interest from stocks, etc.
Form 1099
If you're filing Single and earn $69,420 for the year, how much will you owe in federal income tax? (Assume there's no deductions taken into account)
Taxes Owed = $10,325.40
Step 1: Find the correct tax bracket when you earn $69,420 (3rd Tax Bracket, or 22%)
Step 2: Follow the directions under "The Tax Is" ( You owe $5,246 + 22% any amount of money over $47,150)
In the calculator, you can type the following: 5,426 + (0.22 ⋅ (69,420 - 47,150)) = $10,325.40
The Standard Deduction rates for 2024 are as follows:
Single = $14,600
Married, Filing Separately = $14,600
Married, Filing Jointly = $29,200
Head of Household = $21,900
If you're filing as Head of Household and earn $105,000 for the year, once you apply the standard deduction, what’s the highest tax bracket (%) you'll be placed in for 2024? Use the source below to see all of the available tax brackets:
https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets
Tax Bracket = 22%
$105,000 - Standard Deduction (which is $21,900 for Head of Household) = $83,100. This amount is between $63,100 and $105,000, which places you in the 22% tax bracket.
Eating protein can be expensive, especially when you order it at a fast food restaurant. Which fast food chain has the most expensive chicken item you can order (Single item)?
A) Pizza Hut's 36-piece Chicken Wings
B) KFC's 16-piece Chicken
C) Domino's 32-piece Chicken Wings
D) McDonald's 40-piece Chicken McNuggets
A) Pizza Hut's 36-piece Chicken Wings = $58.99
KFC's = $39.99
Domino's = $33.99
McDonald's = $11.79
Source: https://247wallst.com/special-report/2024/01/20/16-most-expensive-fast-food-items-to-buy-this-january/
Definition: A tax that incrementally increases as income increases
Progressive Tax
Definition: An allowable reduction on income tax forms that is based on the filing status; these amounts are set by the government and may change from year to year
Standard Deduction
You love college football and are naturally drawn to the one of the most dominant programs in the country: The University of Georgia. You decide to move to Athens, Georgia and earn a living while attending all of their football games.
Assuming you're Single and earn $38,750 for the year, Question #1: How much will you have to pay the state of Georgia in income tax? (*Georgia uses a flat tax of 5.49%, keep that in mind). Question #2: How much of your income do you actually get to keep, before paying taxes to the federal government?
https://taxfoundation.org/data/all/state/state-income-tax-rates-2024/
Q1: Georgia State Income Tax = $2,127.38
Q2: Money kept before other taxes = $36,622.62
Question #1: Multiply your income by the flat tax rate ($38,750 ⋅ 0.0549 = $2,127.38)
Question #2: Take the difference of your income and taxes you owe to the state ($38,750 - 2,127.38 = $36,622.62)
You're filing your taxes as (Single) and the total amount of money you earned for the year was $41,625. Your job estimated and withheld $5,500 for Federal Income Tax on the year, which was a bit too much. Use the Tax Schedule to determine how much your job overestimated on your withholdings.
(Quick Math for Taxes) https://www.kps-cpa.com/tax-rates
Extra Taxes Paid = $737
Step 1: Using the link, calculate the amount of income tax owed [ $1,160 + (0.12 ⋅ ($41,625 - $11,600)) = $4,763 ]
Step 2: Take the difference between what your job took out and what you actually owed ($5,500 - $4,763 = $737)
Urban Dictionary is full of some interesting words and phrases. But there's one that stands out among the rest... and that is Clutch Oven. What does Clutch Oven mean?
A) When a superhero is in the middle of cooking dinner, runs out of the house to "cook some fools," and comes back to finish cooking.
B) Releasing a "nice big toot" in a car full of people and locking the windows in place to give them something to admire for the drive.
C) Texting your boss that you willing to cover someone's work shift, while you happen to be "dropping off some timbers" on the porcelain throne.
D) Running late for thanksgiving dinner, so you bake a pie at 5x the required temperature to have it prepared just before your friends and family arrive.
B) Releasing a "nice big toot" in a car full of people and locking the windows in place to give them something to admire for the drive.
Definition: One of several categories, each section of a tax schedule has an increasing percentage that you owe to the government as you earn a higher income
Tax Bracket
Definition: When a taxpayer uses a tax rule to legally lower the amount of tax they owe to the federal government
Tax Avoidance
Let's say you want to move to Hawaii because you want to surf the waves! You also happen to be in love with the movie Baywatch; all the hot guys and hot girls... the dream! You decide to move out there to live out your fantasy and become a Lifeguard, to which you earn $13,000 on the year.
Mr. Brown tried to warn you that Florida is where it's at... but you had to go chase the hotties in Hawaii. Now you're stuck having to pay a state income tax. Assuming you're Single, how much do you owe the state of Hawaii in state income tax? (*Hawaii uses a progressive tax, keep that in mind)
https://taxfoundation.org/data/all/state/state-income-tax-rates-2024/
Taxes owed to Hawaii = $733.60
Step 1: Go through each tax bracket and take the appropriate percent for each amount.
- 1st Bracket: The first $2,400 gets taxed at 3.20% = $76.80
- 2nd Bracket: The next $2,400 gets taxed at 5.50% = $132.00
- 3rd Bracket: The next $4,800 gets taxed at 6.40% = $307.20
- 4th Bracket: The remaining $4,300 you have left gets taxed at 6.80% = $292.40. When you combine all 4 Brackets, you get a total of $733.60
The Standard Deduction rates for 2024 are as follows:
Single = $14,600
Married, Filing Separately = $14,600
Married, Filing Jointly = $29,200
Head of Household = $21,900
If you're filing as Married Filing Separately and you alone earn $85,800 for the year, once you apply the standard deduction, how much will you actually owe in federal income tax? Use the source below to see all of the available tax brackets:
(Tax Brackets) https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets
(Quick Math for Income Taxes) https://www.kps-cpa.com/tax-rates
Federal Income Tax = $10,717
Step 1: Use the Standard Deduction to calculate how much income you'll actually be taxed on ($85,800 - $14,600 = $71,200)
Step 2: Use the value from Step 1 and calculate how much you owe in Federal Income Tax using the "Quick Math" link [ 22% Bracket: $5,426 + (0.22 ⋅ ($71,200 - $47,150) = $10,717 ]
There have been a total of 89 NFL Drafts since it first began in 1936. Once a year, 32 teams get the chance to select a variety of college and international players to add to their squad. Ironically, there are two different teams that are tied for having the worst record at the end of a season and getting the 1st overall pick in the draft.
Which 2 teams hold the most #1 overall draft picks in NFL history?
A) Kansas City Chiefs
B) Jacksonville Jaguars
C) Indianapolis Colts
D) Los Angeles Rams
E) Denver Broncos
C) Indianapolis Colts (7 total)
D) Los Angeles Rams (7 total)
Kansas City (1 total, 2013)
Jacksonville (2 total, 2021 & 2022)
Denver (0 total)
Source: https://en.wikipedia.org/wiki/List_of_first_overall_NFL_draft_picks#:~:text=The%20Indianapolis%20Colts%20and%20Los,Pro%20Football%20Hall%20of%20Fame.