Learning Objectives
 Identify the major types of consumer taxation.
 Compute gross and net pay.
 Complete personal income tax forms.

Personal Property Tax

Includes things like real
estate and motor vehicles

Main tax supporting:


 public education emergency services local government

Assessed as a percentage of the current value of the property

Income Tax

Imposed on earned income by the federal government and by most state & local governments
 Amount pays depends on their tax bracket
 More money earned = higher percentage paid in taxes

Sales Tax
 Consumption tax charged at the point of purchase for certain goods & services
 In Virginia, sales tax is usually six percent

Sales tax in restaurants may very by county (local government)

FICA

Refers to social
security and Medicare taxes paid by individuals and employers
 Usually 7.65% of the employee’s gross pay
 Employer will match with another 7.65%

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

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.

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Form W-2

Federal tax form issued by
employers that states how much an employee was paid in a given year

1040 EZ
Use this form if…
 Income is less than $100,000
 Filing as single or married
 Under age of 65
 No dependents

1099
 Used to report taxable income, such as:

Interest

Dividends

Stock sales

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 to prepare their taxes and then e-file online with the IRS.

Activity
