Financial Lit Income and Tax

Earned Income

comes from working a job and getting paid

Unearned Income

getting money without having to work for it directly.

Income

is money that a person or a business receives in return for working, providing a product or service, or investing capital

Wealth

implies money or valuable possession accumulated by a person during their life.

Earnings

 is the money you have made - can be earned from working a job, running a business, investing

Gross Pay

is the total amount you earn before deductions are subtracted

employee benefits

are offered to employees over and above what they receive as a salary.

tax

This is a required payment by a taxpayer mandated by the government

IRS

Internal Revenue Service are the ones who collect income taxes and enforce the tax laws.

tax bracket

Refers to a range of incomes subject to a certain income tax rate. It is based in which taxes increase based on the growth of an individual’s income

tax return

is a form or a form filed with a tax authority that reports income, expenses, and other pertinent tax information

filing status

This is your tax-filing group based on marital status as of the last day of the tax year

exemption

Is an amount you can subtract from your income for each person that depends on your income in your household

What factors can affect employment?

• Supply and Demand

• Geographic Location

• Level of Education

• Type of Industry

• Union Membership

• Productivity

• Skill Level

• Work Ethic

List some ways you can earn an income.

• Working a job 

• Providing a product or service

• Investing capital

__________ and _______ are examples of government programs that provide insurance against loss of income and benefits to eligible recipients. Also known as FICA.

Social Security + Medicare

Listed the sources of unearned income.

• Birthday Money

• Unemployment Benefits (Only if you have been employed)

• Interests on Savings

• Winning a Financial 

• Prize

• Allowance

• Stock Dividends Paid by Corporations

What are the types of earnings?

• Salary (Fixed annual amount of gross pay, usually paid monthly, weekly, etc)

• Monthly Wages (fixed hourly rate earned by employees)

• Overtime (time worked beyond your regular hours. Some businesses will pay employees for those additional hours worked. Not all companies do this

• Tips (Also known as a gratuity, is a sum of money given to someone to reward their services)

What are optional deductions from your paycheck?

Are items you choose to have withheld from your paycheck, such as health insurance, retirement, flexible spending, dental insurance, life insurance, eye insurance, union fees, etc

What are the types of benefits and incentives?

• Sick/Personal Leave

• Paid Vacation and Holidays

• Retirement Plans

• Medical Insurance

• Dental and Vision Coverage

• Profit Sharing - Allows you to earn a profit of the company’s profit at the end of the year.

• Stock options - Allows employees to buy stock of the company at a discounted price.

• Employee Discounts - Buy products or services at a discounted price. 

• Bonuses & Incentive Pay - Encourages employees to be rewarded for their efforts

The tax laws require a percentage of taxpayers' earnings to be taken out and submitted to the government yearly. Failure to do so is ___________ . 

punishable by law

Every year citizens of the United States must file _______ and _______ tax returns. To do this ethically and legally, you must understand all parts of a tax return, and this is filed with the IRS.

Federal + state

What do tax revenues help finance?

Tax revenues help finance government activities, including public works and services, such as social security, Medicare, schools, roads, and other programs. 

List the types of Taxes.

Progressive - Is based on the taxpayer’s ability to pay. It imposes lower tax rate on low-income earners than those with a higher income

Regressive - Is a tax applied uniformly, taking a more significant percentage of income from low-income earners than high-income earners.

Proportional - An income tax system that levies the same percentage tax to everyone regardless of income, and a blanched tax is the sae for low, middle, and high-income taxpayers

Income Tax - Is a tax imposed on individuals or entities regarding the income or profits earned by them

Payroll Tax - Taxes imposed on employers or employees and are usually calculated as a percentage of the salaries employers pay their employees.

Sales Tax - Is a tax paid to a governing body for the sales of specific goods and services. 

Property Tax - Property tax is paid on property owned by an individual or other legal entity, such as a corporation. 

Tariff - Is a tax imposed by a country’s government or of a supranational union on imports or exports of goods.

What are the options for filing status?

• Single

• Married Filing a Joint Return (Together)

• Married Filing Separate

• Head of Household (You can do this if you are married or single and provide a home for a dependent)

• Qualifying Widow(er)

Who can be dependents?

Dependents can be spouses, children, elderly parents, and disabled relatives

You must report all your ________ on your tax return.

Gross Income

The most common form of reporting income is a _____ form.

W-2