Federal Income Taxes

1. Federal Income Taxes January 5, Twenty Ten

2. Individual Income Tax • In 2008 – $2.5 Trillion in revenue • Each person paid $8,333 • Individual Income Tax – Taxes on our income • Makes up 47% of the money the government takes in • Determined by what you make annually • But Gov’t takes money out weekly • Allows government to pay bills throughout the year • To ensure people are able to pay

3. Individual Income Tax Cont’d • Filling a Return – April 15th • W-4 form allows gov’t to take $ out of your check weekly • Tax Withholding – taking taxes out before you receive your check. • Money taken out is based on an estimate • Some people get a refund • Some people pay more • W-2 Form • Tells you how much you made for the year • How much you paid in taxes • 1099 – savings accounts • Tells you how much interest you make • Form 1040EZ • Figures out your taxable income – amount you have to pay taxes on

4. Individual Income Tax Cont’d • Deductions – things you do not have to pay taxes on • “Write-off” • Trying to get yourself into a lower tax bracket • Examples of deductions: • Children ($2500) • College Tuition • Business Expenses • Checks to church/charities • Interest on Mortgage

5. Other Taxes • FICA – money taken out for Social Security and Medicare • Excise Tax – taxes on goods – gas, alcohol, tobacco, cell phones, cable • Estate Tax – pay on what you own when you die • If you are worth 2.5M • Gift tax – tax on gifts you receive over $11,000/yr • Imports – tax on foreign goods brought into the country