WHAT I KNOW

TAXES- WHAT ARE THEY?

• Taxes are money that goes to the government to help pay for services.

WHAT IS A COMMUNITY?

• A group of people working together for a common good

BENEFITS OF TAXES

• Protection
• Education
• Roads
• Recreation
• Libraries/Museums

INCOME TAX

• A tax on earned and unearned income.
• Earned income: money earned from working (wages/salary)
• Unearned salary: income received from sources other than employment (interest earned from savings)
• Divided into federal and state income tax

PAYROLL TAX

• A tax on earned income that supports the Social Security and Medicare programs (FICA)
• A set percentage of earned income -- deducted out of paycheck (except for self-employed)
• Social Security: retirees, disabled, lost parent or spouse.
• Medicare: helps pay health care for senior citizens.
• Paid by employees and employers

PROPERTY TAX

• Tax on property such as land, buildings (including homes), and motor vehicles.
• Determined by the percentage of property value; amount paid varies depending on location.
• Paid by owners to help fund schools and expenses of the state and local governments.

SALES TAX

• Tax on items purchased in retail stores.
• Determined by a percentage added to the original price of an item.
• Paid by anyone who purchases an item with sales tax.

EXCISE TAX

• Taxes charged on consumption items.
• Typically included with the price of gas, hotel rooms, airline, cigarettes, and alcohol.
• Taxes charged vary by location; paid by anyone who purchases these items.
• Fund the expenses of the state and local governments.

W-2 FORM

• A form you receive from your employer that says how much money you made the past year, and how much you paid for taxes.

W-4 FORM

• A form you fill out given to your employer, telling them how much will be taken out for taxes.

APRIL 15

TWO TAKEAWAYS!

• Know when and how to file your taxes.
• Have some understanding of where your money is going, and what it is paying for.