Basics
What are taxes
Yearly deductions from your earnings
Provided in January (explain it's purpose)
W2 - a form employers provide that has information you need to file your taxes
Sophia made $12,000 in earned income, does she need to file her taxes?
No, she made less than the standard deduction
Does an employed person under 18 have to pay Social Security and Medicare tax?
No, they do not
What are taxes used for?
To fund government programs such as national defense, healthcare programs, public infrastructure
Provided when Hired (explain)
W4 - provides your employer with information regarding what to take out of your paycheck. If you're tax exempt file it here
Clara made $1,600 in unearned income, does he need to file his taxes?
Yes, he made more than $1,500 in unearned income
If you turned 18 half way through the fiscal year, do you have to pay Social Security and Medicare tax?
No, if you were under 18 at any time you DO NOT have to pay SS and Medicare tax
Taxable Income Formula
Gross Pay - Standard Deduction
Contains info about yourself and your family
W4
Head of Household
Earned vs Unearned Income
Earned is what you made working (wages, salaries, etc) Unearned is what you made with investments, savings, large amounts of gift money
You find your tax bracket by
Taking your taxable income, compare it to the tax bracket list for that year, find the highest tax bracket you qualify for
Contains info about your earned income
W2
Matt works at a major retail store, his wife works from home to take care of the kids. His wife let him file their taxes this year. Can he file as head of household?
No, he should file as Married Filing Jointly
They are Tax Exempt
Non-Profits, US Citizens working abroad, Those who don't meet the income threshold
Enforces Taxes (The big scary tax man)
IRS
tax exemption is filed on this form
W4
Jeb made $10,000 in earned income and $500 in unearned income. Do they need to file their taxes?
Yes, their gross income is $400 more than their earned income.
They Pay Taxes
Everyone who has income