Understanding Taxes
What are taxes used for?
What is funding public services like roads, schools, and emergency services?
Give an example of a taxed item.
What is clothing or electronics?
What is gross income?
What is the total amount of money earned before taxes and deductions?
What is the I-9 form for?
To verify employment eligibility in the United States.
What kind of tax do homeowners pay to fund local services like schools and police?
What is property tax?
Name one type of tax and what it funds.
What is income tax, which funds federal government programs?
Give an example of a non-taxed item and why it's not taxed.
What is groceries, because they are essential for basic living?
What is a tax deduction?
What is an amount subtracted from gross income to reduce taxable income?
What does the W-4 help your employer figure out?
How much federal income tax to withhold from your paycheck.
What kind of tax do you pay when buying clothes or electronics?
What is sales tax?
Give me 3 examples of what taxes fund other than roads.
What are schools, police and fire departments, and public parks?
Why are some items like groceries usually tax-exempt?
Because taxing basic necessities would unfairly affect low-income families.
What kinds of expenses in everyday life are most commonly subject to sales tax?
What are purchases like clothes, electronics, and restaurant meals?
What is a W-2, and when do you get it?
A form that reports your wages and taxes withheld, given at the end of the year by your employer.
What kind of tax is taken out of every paycheck to support Social Security and Medicare?
What is payroll tax?
Name two different types of taxes and give an example of what each one helps pay for.
What are property tax (funds local schools) and sales tax (funds state/local government services)?
Explain why some items are taxed but certain types of income (like gifts) are not.
Some items are taxed to raise revenue, but gifts are often untaxed to avoid double taxation or because they are not earned income.
A person earns $25,000 and takes a $13,850 deduction. What is their taxable income?
What is $11,150? (25,000 - 13,850 = 11,150)
Which two forms do you need to complete when starting a new job, and what is the main purpose of each?
W-4 to tell your employer how much tax to withhold; I-9 to verify your identity and legal work status
What’s the difference between income tax and payroll tax in who pays them and what they fund?
Income tax is paid by individuals based on earnings and funds general government programs; payroll tax is split between employees and employers and funds Social Security and Medicare.
Explain how excise taxes can influence consumer behavior/choice.
Excise taxes raise the price of certain goods (like cigarettes), which can discourage people from buying them.
You mow lawns and get birthday money. Which is taxed, and why?
Mowing Lawns Depends; birthday money is a gift and usually not taxed.
Why do people with the same gross income sometimes owe different taxes?
Because of differences in deductions, tax credits, filing status, and other tax
How are the W-2 and 1099 used when filling out the 1040 form?
They report income to the IRS and help you fill out your tax return accurately.
List all 5 major tax types and give one example of what each one applies to.
Income tax: wages/salaries
Payroll tax: Social Security & Medicare deductions
Sales tax: buying clothes or electronics
Property tax: owning a home
Excise tax: gasoline or cigarettes