TAX Basics
What are taxes?
A sum of money demanded by a government
TRUE or FALSE: Income tax is tax on earned and unearned income.
TRUE!
What is payroll tax?
A tax on earned income.
True or False: Social Security helps people with disabilities
TRUE!
What is a property tax?
Tax on anything a person owns (house, boat, land)
What form do employees get from their employer that will help them with filing taxes?
W-2 form
What does federal income tax help pay for?
Government programs (education, defense of the nation, disaster relief)
TRUE or FALSE: Payroll tax is not a set percentage of earned income.
False. It is a set percentage of earned income.
What does social security tax come from?
Payroll tax
Give one example on when you would pay a sales tax.
When you buy clothes, shoes, food in restaurants
Name one thing taxes pay?
roads, libraries, military, schools, police department, fire department, parks
TRUE or FALSE: ALL states have state income tax.
FALSE
Payroll tax is deducted out of your paycheck except for those who are _____________ .
self-employed
What is Medicare?
health care for senior citizens
When do you pay excise taxes?
gas, airline tickets, hotel rooms, alcohol, cigarettes
Why do we talk about community when we talk about taxes?
We pay taxes to help those within our different communites.
What are the components of income tax?
Federal and state income tax
What is another name for payroll tax?
FICA (Federal Insurance Contributions Act)
6.2%
When I purchase airline tickets, what tax am I paying?
Excise
Name two types of taxes.
income, excise, payroll, property, sales
Give an example of unearned income.
interest earned on a savings account
What does payroll tax help fund?
Social Security and Medicare
What percentage of earned income is for Medicare?
1.45%
Why are taxes an important part of money management?
Play a roles in earning and spending money; one of the largest expenses