COM - Income Tax Lesson
Income Tax
Introduction
Wait… how much is taken out of my paycheck?? Your gross pay is not the actual take-home pay that you receive in your paycheck. The amount of money after deductions such as taxes and health care plans is called your net pay. This is what you get to spend or stash away into savings. Taxes are used for a variety of things from different parts of the government. There are federal income taxes and also state income taxes. Let’s take a look at these topics since we definitely would like to know where our money goes and what our money is going towards!
Federal Income Tax
Employers are required by law to withhold a certain amount of your pay for federal income tax and your state income tax. This amount is a “guess” of sorts of how much you will need to pay in taxes for the year. If they take out too much, then you will get a refund later on, but if they don’t take out enough, then you will owe money to the government!
Click on the tabs to discover more about each type of income tax. Use the tables linked. You may print these tables if you would like to. Please pay attention to which table you need to use.
Click here to download the Married Persons Allowances Chart. Links to an external site.
Click here to download the Single Persons Allowances Chart. Links to an external site.
State Taxes
If you found any of these problems challenging, here is a video that will go over one of the answers.
Income Tax Practice Problems
Use the tax charts.
Social Security
What is Social Security? How did it start?
SOCIAL SECURITY was described as a "contract between generations."
The current generation of workers would pay into a fund while the retirees would take in a monthly stipend. Upon reaching the age of 65, individuals would start receiving payments based upon the amount contributed over the years. Employees would have one percent of their incomes automatically deducted from their paychecks, a rate that was originally envisioned to reach 3%. Employers would also contribute for their employees. The plan was mandatory except for individuals in exempted professions. Roosevelt knew that this reform would be permanent. He guessed that once workers had paid into a system for decades, they would expect to receive their checks. Woe to the politician who tried to end the system once it was in place.
A committee of staffers led by Secretary of Labor Frances Perkins, the first female ever to hold a Cabinet position, penned the Social Security Act. In addition to providing old- age pensions, the legislation created a safety net for other Americans in distress. Unemployment insurance was part of the plan, to be funded by employers. The federal government also offered to match state funds for the blind and for job training for the physically disabled. Unmarried women with dependent children also received funds under the Social Security Act. President Roosevelt signed the Social Security Act into law in 1935. Designed to pay retired workers age 65 or older a continuing income after retirement, this act helped Americans breathe easier about their futures.
Source Links to an external site.
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