Presentation Transcript

1. Warm Up Use the packet of forms to answer the following: What is the purpose of a W-4 form for taxpayers? What are the differences between a 1040EZ and a 1040 tax form? What type of person should file a 1040EZ instead of a 1040? What is the date that income taxes are due to the Federal government? What is an audit?
2. Warm Up Answers What is the purpose of a W-4 form for taxpayers? So that your employer can withhold the correct federal income tax from your paycheck. What are the differences between a 1040EZ and a 1040 tax form? 1040EZ is simple, straightforward form, with limited adjustments or deductions allowed. 1040 includes deductions used to adjust your gross income (student loan interest as EX) What type of person should file a 1040EZ instead of a 1040? A person who does not have dependents and does not make any adjustments to income. What is the date that income taxes are due to the Federal government? April 15th What is an audit? When the IRS verifies that a person has paid the correct amount of taxes.
3. Personal Finance

   Tax FormsPay CheckFinancial AccountsInvestment Types

4. Warm Up In the Budget Project, were you surprised at the difference between the amount of your salary and “take home” (after taxes)? Did you think it would be more or less and by how much? What deductions do you think are made to your salary? Be specific.
5. What’s in a Paycheck? What is Gross Pay? Total amount of money earned before any deductions. What is Net Pay? Amount left after all deductions are taken out of the gross pay. Is your paycheck the total of the number of hours worked times the rate of pay? NO!!! Mandatory and other deductions are taken out first.
6. Calculating a Paycheck Calculate both paychecks. Feel free to work with the person next to you. Please do not write on the tax tables, but definitely use them for help.
7. What’s in a Paycheck? What is aMantadory Deduction? Deductions which an employee has no control. Employer is required to take out….(what are some examples?) FICA– Federal Insurance Contributions Act; provides $ for Social Security and Medicare What are Other Deductions? Deductions which your employer offers and you accept. Aka Voluntary Deductions. Some examples …
8. PayCheckVideo Clip

9. Financial Accounts

10. Retirement Accounts 401K- Allows a person to contribute to a savings plan for retirement, from his or her pre-tax earnings, reducing the amount of tax that must be paid. Employer may match contributions up to a certain level. 403B- An equivalent plan for people who work for the government.
11. Retirement Accounts IRA- Individual Retirement Account- Allows a person to contribute up to $5000 of earnings per year into a retirement account. You can invest in stocks, mutual funds, CDs, Bonds, precious metals, or even real estate. Roth IRA- Same as IRA, but contributions are not tax deductable, but earnings grow tax free.
12. Checking Accounts A checking account is a deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Allows you to make payments by writing a check, using a credit/debit card, direct transfers, or by using an ATM.
13. Checking Fees Overdraft- When you “bounce” a check, meaning you do not have enough funds in your account to cover a check. ($39 and up) ATM Fees- Can be charged when you get the cash at the machine and again by your bank. ($2 and up)
14. Savings Accounts An account that allows people to put money aside and gain a small amount of interest. Transactions can be limited per month and then additional fees may be added. Statements are available online and through an ATM.
15. Balancing a Checkbook In order to avoid bank fees, it is a good idea to keep a record of transactions. This can be done on a checkbook register. Complete the “keeping a running balance” activity and hand in for classwork grade.
16. Investment TypesYou should print the following six slides. We will discuss them briefly in class and it would be benefical if you already had them printed out. Pay Yourself First!! Certificates of Deposit Bonds Mutual Funds Stock
17. Investment Types Pay Yourself First!! Prioritize savings over spending! Save as early as possible! Rule of 72: If you divide the number 72 by the interest rate it will tell you the number of years to double your investment EX- money invested at rate of 7.2% interest would double in 10 years.
18. Warm Up Name and describe the 4 Factors of Production. How does the Federal Reserve react when the economy is in a recession? What is the difference between comprehensive, collision, and liability within auto insurance? What is the difference between a 1040 and a 1040EZ?
19. Investment Types Certificates of Deposit Commonly called a CD- These are bank products where the bank pays a fixed amount of interest for a fixed amount of money during a fixed amount of time. Benefits- No risk, simple, no fees, offers higher interest than savings account. Trade-Offs- Restricted access to money and possible withdraw penalty.
20. Investment Types Bonds A bond is an “IOU,” certifying that you loaned money to a government or corporation, outlining the terms of repayment. A buyer may purchase a bond at a discount or at face value. The bond pays a fixed interest rate for a fixed period of time. When the time is up, the bond has “matured” and the buyer may retrieve the bond for full face value.
21. Investment Types Types of Bonds Corporate- Sold by private companies to raise money. If company goes bankrupt, bondholders have the first claim to assets, before stockholders. Municipal- Issued by any non-federal government. Interest paid comes from taxes or from revenues from special projects. Federal- The safest investment to make. Even if US goes bankrupt, it is obligated to pay bonds
22. Investment Types Mutual Funds Mutual funds are professionally managed portfolios made up of stocks, bonds, and other investments. Individuals buy shares, and the fund uses money to purchase stocks, bonds, and other investments. Profits are returned to shareholders on a quarterly basis in the form of dividends. The value of the mutual fund will also go up and down based on the value of its holdings. Advantages- Allows small investors to take advantage of professional account management and diversification.
23. Investment Types Stocks Stocks represent ownership of a corporation. Stockholders own a share of the company and are entitled to a share of the profits as well as a vote in how the company is run. Company profits may be divided among shareholders in the form of dividends. Larger profits can be made through an increase in the value of the stock on the open market. Advantages- If the market value goes up the gain can be considerable. Money is easily accessible. Disadvantages- If market goes down, the loss can be considerable. Selecting and managing stocks requires study and the help of a brokerage firm.
24. Stocks and Bonds (Tune: Row, Row, RowYourBoat) Bonds, Bonds, Bonds are things That pay an interest rate. Gradually, Gradually, Gradually, Gradually, Growing while you wait. Stocks, Stocks, Stocks are things That pay a dividend. Gradually, Gradually, Gradually, Gradually, Money you can spend. Stocks, Stocks, Stocks, they change, The price goes up or down. Gradually, Gradually, Gradually, Gradually, Money goes round and round.
25. Investment Types Youtube Investment Types https://www.youtube.com/watch?v=-ccQ6OPUQcg Bonds vs. Stocks http://www.investopedia.com/video/play/stocks-versus-bonds/ Based on the video clip, What are some advantages and disadvantages to stocks and bonds?