Intro
Need
Something you must have
Gross Income
The amount of earnings before payroll deductions
401k
Employees contribute pre-tax dollars into a retirement fund to be invested in financial markets. Taxes aren’t paid until the money is withdrawn from the account at 59½ years old.
IRS
Internal Revenue Service
Determines the percentage of gross pay which will be withheld for taxes.
Want
Something you would like to have
Net Income
Take home pay is your gross income minus payroll deductions
Pension
The employee receives regular payments in retirement, this plan is funded by the employer
Deductions
Federal income taxes
State income taxes
Social security taxes
Medicare taxes
Local income taxes
W2
Shows your taxable income, this form is filled out by the employer
Goal
Needed in order to be financially successful. Use your needs and wants to create goals for yourself
Wages
Employees who work for wages are paid for each hour worked
Roth IRA
Set up by an individual, earnings on the account and withdrawals after age 51½ are tax free
Taxable Income
All income (salary, wages, tips, commission)
Interest on savings accounts, bonds
Dividends and capital gains
Gambling winnings
1040
Form that individual taxpayers use to file their income tax returns
SMRT
Specific- Enough detail to be understood
Measurable- Can be quantified
Realistic- Can be accomplished
Time-bound- Has a reasonable time frame
Overtime pay is at least 1.5 times the regular pay
What to do with your 401k if you switch jobs
If you switch jobs, you should rollover your 401k into a Roth IRA or the new company's retirement plan.
Not Taxable Income
Money put into retirement plan
Gifts up to 14k per year
Tax Avoidance
Reducing your taxes by claiming legitimate adjustments, tax deductions, and credits
SMRT Goal Example
For the next 22 weeks, save an extra $30 per week from my part-time job to buy a $1,000 256GB iPhone 12Plus
The standard work week is 40 hours
When are taxes paid for a 401k
Taxes aren’t paid until the money is withdrawn from the account at 59½ years old.
Federal Income Tax
It is a progressive tax, Rates range for 10% to 35%
Tax Evasion
Failing to declare all income or falsifying deductions, adjustments, or credits