Types of Taxes
Does a regressive tax affect poor or rich people more?
A tax that affects poor people more
What month do you get your W-2?
In January
Define dependents.
Someone who has more than 50% of their expenses paid for by someone else.
What is sales tax?
Taxes on items that you buy
Andaysha spends $35 at the shoe store. How much does she pay in total after tax in MA?
$37.19
Tax based on the value of your dwelling/land.
Property Tax
What is a W-4 used for?
Determines how much an employer will withhold from your taxes.
Define withholding.
How much they take out of your paycheck for taxes.
What two programs does payroll tax fund?
Social security and medicare
You find out that you have to pay $500 in taxes this year. If you get paid once every two weeks, how much should you additionally have withheld so that you don't have to pay next year?
$9.62 per week or $19.23 every two weeks.
What percentage is sales tax in Massachusetts?
6.25%
What is a W-2?
Tells you how much you made at a job and how much was withheld in a year.
What is your tax liability?
How much you owe in taxes.
What is value added tax?
You spend $3,000 on interest on your house, $,1500 on interest on your student loans, donate $600 to charity. Should you itemize or take the standard deduction as a single person?
Standard Deduction
Name of tax on items deemed harmful or costly. Tax was created in hopes of reducing consumption.
Sin Tax
What do you do with form 1040?
Complete your taxes
What is an audit?
When the IRS fact checks your taxes to make sure you are telling the truth.
What are property taxes?
Taxes on things that you own (cars, boats, etc.)
You make $50,000 a year and take the standard deduction. What is your taxable income?
$37,050
Extra tax on profit made from investments (stock/real estate).
Capital Gains
Which tax form(s) would change if you had a kid?
W-4, 1040
What is the difference between a tax credit and a tax deduction?
Tax deduction reduces your taxable income and tax credits reduce your tax liability
If you bought a car in NH, would you have to pay sales tax on it?
Yes, if you register the car in MA.
What is your taxable income if you make $20,000 per year, are single, and take the standard deduction.
$7,050