Vocabulary
Pay earned before deductions.
Gross Earnings
When you are employed by a business, you pay ____% for Social Security.
6.2%
When you are employed by a business, you pay ____% for Medicare.
1.45%
The U.S. government agency responsible for administering and enforcing federal tax laws, collecting income taxes, and processing tax returns.
IRS
Do all states collect income tax?
No
Amount of money the employee receives
Net Pay
When you are self-employed, you pay _____% for Social Security.
12.4%
When you are self-employed, you pay _____% for Social Security.
2.9%
An IRS document filled out by employees to inform employers of their tax filing status, dependents, and other adjustments, which determines the correct amount of federal income tax to withhold from each paycheck.
W-4 Form
Kelen works as a nurse in Michigan and earns $4250 for the month. Calculate the state withholding tax if the tax rate is 4.25%.
$180.63
Established to help those 65 and over, as well as younger people with disabilities.
Medicare
Find the Social Security tax that must be withheld from gross earnings of $495.60.
$30.73
Find the Medicare tax that must be withheld from gross earnings of $495.60.
$7.19
Which method for determining federal income tax does not require a calculation, but does require a large table for reference.
Wage Bracket Method
An optometrist assistant works in Illinois and earns $3225 for the month. Calculate the state withholding tax if the tax rate is 4.95%.
$159.64
President Franklin D. Roosevelt created this to help support elderly people.
Social Security
Find the Social Security tax paid by Ta Shon Williams, a self-employed web designer who had adjusted earnings of $62,340 this year.
$7,730.16
Find the Medicare tax that must be withheld from gross earnings of $525.00.
$7.61
Imani Jones has earnings of $5735 for the week. He is married and files separately. Use the percentage method to find his withholding tax.
1015.96+35% of (5735-4713)
=$1373.66
Name 2 states that don't collect income tax.
Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming.
An IRS document filled out by employees to inform employers of their tax filing status
W-4
Find the Social Security tax that must be withheld from gross earnings of $525.00.
$32.55
Find the Medicare tax for a self-employed accountant who had adjusted earnings of $75,293 this year.
$2183.50
Ava Martinez works part-time as a video game designer assistant and earns $1,245 for the week. She is single. Use the percentage method to find her federal withholding tax.
98.96+22% of (1245-1126)
=$225.14
Which state has the highest income tax rates for millionaires?
California