CONSUMER TAXATIONIntroduction to Business & Marketing

LEARNING OBJECTIVES

Understand taxes and payroll deductions

Identify the major types of consumer taxation.

Compute gross and net pay.

Complete personal income tax forms.

WHAT ARE TAXES

A sum of money

demanded by a

government for its

support or for specific

facilities or services,

levied upon incomes,

property, sales, etc.

TYPES OF CONSUMER TAXATION

PERSONAL PROPERTY TAX

State mandated tax requiring the

owner to pay a percentage on the

value of their property

Homes

Cars

Recreational Vehicles

Main tax supporting public

education, emergency services,

and local government

INCOME TAX

Requires workers to pay

a percentage of their

earned income

Imposed by the federal

government and by most

state & local

governments

Amount paid depends on

your tax bracket

SALES TAX

Consumption tax

charged at the point of

purchase for certain

goods & services

Each state or

jurisdiction can set its

own sales tax

percentage

SALES TAX EXAMPLES

Virginia – 5%

Tennessee – 9%

Oregon – 0%

Delaware – 0%

California – 11%

FICA Federal Insurance Contribution

Act

Payroll deductions paid by

individuals

Social Security - 12.4%

Medicare – 2.9%

If you are a wage or salary

employee your employer pays

half

Self employed – you pay all

UNDERSTANDING YOUR PAYCHECK

WHEN YOU GET PAID… Gross Pay: wages & salary

Deductions : federal taxes, state taxes, FICA, and other optional deductions

Optional deductions include things like health insurance, retirement, etc.

Net Pay: take-home pay

Calculated by subtracting deductions from gross pay

IN YOUR NOTES

Look over the paystub provided.

Circle & label the employee’s gross pay.

Draw a rectangle around all the deductions for

this paycheck.

Circle the employee’s net pay for this paycheck.

How much did the employee pay in taxes?

What percentage of the employee’s gross pay

went toward taxes?

INCOME FORMS

FORM W-4

Completed every time you

start a new job

Determines how much you

will pay in taxes each

paycheck

If you claim zero, the

highest amount of taxes

will be withheld from your

paycheck.

FORM W-2

Federal tax form

issued by

employers that

states how much

an employee was

paid in a given

year

Used to complete

tax return

Real World Business

Chicago, IL 60640

Irma Money

2301 South Jackson

Chicago, IL 60640

000-00-000

16,680.2416,680.24

1034.16

1,728.00

241.9216,680.24

IL

12-2222222

16,680.24

440.40

12-2222222

D 2000.00

Real World Business

Chicago, IL 60640

Irma Money

2301 South Jackson

Chicago, IL 60640

16,680.24

16,680.24

1034.16

1,728.00

241.9216,680.24

IL

12-2222222

16,680.24

440.40

12-2222222

D 2000

FORMS FOR FILING TAXES

TAX FORMS

1040 EZ 1040AUse this form

if… Income is less than

$100,000

Filing as single or married

Under age of 65

No dependents

Use this form if…Income is less

than $100,000

Claiming adjustments for student loan interest

MORE TAX FORMS

1040 1099Use this form

if… Income exceeds

or equals $100,000

Self-employed

Used to report taxable income, such as interest, dividends, stock sales, etc.

WAYS TO FILE YOUR TAXES

FILING YOUR TAX RETURN

In the past, you would prepare your taxes

and send your complete package in to

the Internal Revenue Service (IRS)

Most people now use TurboTax, or another

online tax service, to prepare their taxes

and then e-file online with the IRS

You can also hire an accountant

TAX FORM ACTIVITY

http://apps.irs.gov/app/understandingTaxes/

student/simulations.jsp

Go to the link provided and complete the

simulations listed below

Simulation 1 – Lawrence Red Owl

Simulation 2 – Cicely King

Simulation 3 – Tasha Miller

Simulation 7A – Monica Lindo