Introduction to Business & Marketing
CONSUMER TAXATION
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
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 Federal tax form
issued by employers
that states how much
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16,680.24 440.40
 Used to complete tax
return
FORMS FOR FILING TAXES
TAX FORMS
1040A
1040 EZ
Use this form if… Use this form if…
 Income is less than
$100,000
 Filing as single or
married
 Under age of 65
 No dependents
 Income is less than
$100,000
 Claiming
adjustments for
student loan
interest
MORE TAX FORMS
1040
Use this form if…
 Income exceeds or
equals $100,000
 Self-employed
1099
 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/stud
ent/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