Federal Income Tax

1. Federal Income Tax 2013 Tax Return (about 108 slides)

2. Military Spending Food Stamps Federal courts FBI NASA Interest on debt Medicaid... Income Tax Corporation Tax Excise Tax Borrowing FederalGovernmentreceivedabout32% ofitsmoney from the Income Tax in 2012 The Federal Government needs $

3. 2012

4. Your employer withholds part of your paycheck and sends it to the Federal Government Week 1 Week 2 Week 3

5. You don’t pay Federal Income taxes once a year on April 15. You pay Federal Income taxes every time you get paid. Week 1 Week 2 Week 3

6. 2014 Federal Income Tax 7 Federal Income Tax Brackets “Taxable” Income

7. Two general rules of income taxes

8. Two general rules of income taxes $9 per hour We don’t tax very poor people

9. Two general rules of income taxes $9 per hour We don’t tax very poor people Big families are taxed less than small families

10. $9 per hour We don’t tax very poor people

11. $9 per hour $10,250 Earned income We don’t tax very poor people

12. 2014 Federal Income Tax You might think… }1175 x 15% = 176.25 $10,250 } 9075 x 10% = 907.50 tax owed: 1,083.75

13. 2014 Federal Income Tax You might think… }1175 x 15% = 176.25 $10,250 } 9075 x 10% = 907.50 tax owed: 1,083.75

14. The first $6,100 you earn is tax free $9 per hour We don’t tax very poor people

15. The first $6,100 you earn is tax free $9 per hour This is called the “Standard Deduction” We don’t tax very poor people

16. $9 per hour $10,250 Earned income We don’t tax very poor people $6,100 Standard Deduction

17. The next $3,900 you earn is tax free $9 per hour This is called the “Personal Exemption” We don’t tax very poor people

18. $9 per hour $10,250 Personal Exemption $3,900 Earned income We don’t tax very poor people $6,100 Standard Deduction

19. Taxable Income $9 per hour $10,250 $250 Personal Exemption $3,900 Earned income We don’t tax very poor people $6,100 Standard Deduction

20. 2014 Federal Income Tax 7 Federal Income Tax Brackets “Taxable” Income } 250 x 10% = 25 $250 tax owed: 25

21. $9 per hour $7,000 Earned income We don’t tax very poor people

22. $9 per hour $7,000 Earned income We don’t tax very poor people $6,100 Standard Deduction

23. $9 per hour $7,000 Personal Exemption $3,900 Earned income We don’t tax very poor people $6,100 Standard Deduction

24. Taxable Income $9 per hour $0 $7,000 Personal Exemption $3,900 Earned income We don’t tax very poor people $6,100 Standard Deduction

25. 2014 Federal Income Tax 7 Federal Income Tax Brackets “Taxable” Income

26. If my taxable income is $0, what about all that money that I’ve been paying each week? Week 1 Week 2 Week 3

27. File a tax return to get your money back

28. Teenagers living at home do not get a Personal Exemption Taxable Income $9 per hour $7,000 $900 Earned income We don’t tax very poor people $6,100 Standard Deduction

29. 2014 Federal Income Tax 7 Federal Income Tax Brackets “Taxable” Income } 900 x 10% = 90 $900 tax owed: 90

30. Two general rules of income taxes $9 per hour We don’t tax very poor people Big families are taxed less than small families

31. Two general rules of income taxes Big families are taxed less than small families

32. Small family

33. Small family $50,000 Earned Income

34. Small family $50,000 Earned Income Standard Deduction (Married) $12,200

35. Small family $50,000 Earned Income 3 personal exemptions ($3,900 each) Standard Deduction (Married) $12,200

36. Small family $50,000 Taxable Income = $26,100 Earned Income 3 personal exemptions ($3,900 each) Standard Deduction (Married) $12,200

37. Large family

38. Large family $50,000 Earned Income

39. Large family $50,000 Earned Income Standard Deduction (Married) $12,200

40. Large family $50,000 Earned Income 7 personal exemptions ($3,900 each) Standard Deduction (Married) $12,200

41. Large family $50,000 Taxable Income = $10,500 Earned Income 7 personal exemptions ($3,900 each) Standard Deduction (Married) $12,200

42. $50,000 $50,000 Taxable Income = $10,500 Taxable Income = $26,100 Big families are taxed less than small families

43. Two general rules of income taxes $9 per hour We don’t tax very poor people Big families are taxed less than small families

44. Two general rules of income taxes $9 per hour Standard Deduction We don’t tax very poor people Big families are taxed less than small families

45. Two general rules of income taxes $9 per hour Standard Deduction Personal Exemptions We don’t tax very poor people Big families are taxed less than small families

46. How does your employer know how much money to withhold each week for the Federal government? Depends on 4 things: • How often you are paid (Weekly, bi-weekly, semi-monthly, monthly) • Marital Status (Single, Married) • Amount you earn • Your number of “allowances” Information on your W-4 form

47. Write these 4 things down! Payroll withholding depends on 4 things: • How often you are paid (Weekly, bi-weekly, semi-monthly, monthly) • Marital Status (Single, Married) • Amount you earn • Your number of “allowances” Information on your W-4 form

48. What’s a W-4 form?

49. What’s a W-4 form? When you are hired, your employer will have you fill out a W-4 form Your employer will use the form’s information to determine the Federal Income Tax to withhold from your paycheck.

50. Number of allowances Marital Status 2 main parts of a W-4