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CHAPTER 5

CHAPTER 5 . Taxes and Your Paycheck. NOTES. The Gov’t receives most of its revenue from? Payroll taxes : taxes based on employee’s earnings Income taxes : taxes you pay on your income More you make, the more you pay Social insurance taxes : taxes you pay to support social programs

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CHAPTER 5

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  1. CHAPTER 5 Taxes and Your Paycheck

  2. NOTES The Gov’t receives most of its revenue from? • Payroll taxes: taxes based on employee’s earnings • Income taxes: taxes you pay on your income • More you make, the more you pay • Social insurance taxes: taxes you pay to support social programs • FICA: Federal Insurance Contribution Act • Social security • Medicare • IRS: Internal Revenue Service Collects income taxes

  3. NOTES Paycheck Stub • Withholding: Boss subtracts money from your paycheck for your taxes • Gross income: Pay before taxes are taken out • Net income: Pay after withholdings are taken out from your gross pay

  4. NOTES • Form W-4: A form that provides your boss information on your tax withholdings • Allowances: Number that reduces the amount of money withheld from your pay • 0 (most withheld) pay more each pay check • 1 (middle) • 2 (least withheld) pay more at end of year

  5. NOTES • 1040EZ: tax return form to determine if you will owe or receive a refund (by April 15th) • W-2: sent by employer to you and IRS to report income and taxes (by Jan 31) • 1099-INT: sent by bank to you and IRS to report interest (by Jan 31)

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