TAX BOOK KAITLYN

What I know about taxes:

What are taxes?

A sum of money demanded by a government to
support the government itself as well as specific
facilities or services

- Everyone pays taxes if they are working.

What is a community?

A group of people with common interests
and concern for the common good.

- United States
- State
- County
- City/Town

What are the benefits of taxes?

Social Security, police, national parks,
schools, Etc.

They allow the government to spend money for
basic operations. Article I, Section 8 of the U.S.
Constitution lists reasons that the government
may tax its citizens. These include to raise an army,
to pay foreign debt and to operate a post office.

What is federal income tax?

A tax levied by the United States Internal
Revenue Service (IRS) on the annual
earnings of individuals, corporations, trusts,
and other legal entities.

- Federal income taxes are applied to all forms of

earnings that make up a taxpayer's taxable income,
such as employment earnings or capital gains.

What is state income tax?

A direct tax levied by a state on
your income.

- Just like federal tax, state income tax is self-

assessed

- Not all states have this income tax

What is a payroll tax?

A tax on earned income that supports the
Social Security and Medicare programs.

- (also known as FICA)

How do employers contribute
to payroll taxes?

Responsibilities include withholding from an
employee's compensation and paying
an employer's contribution for Social Security
and Medicare taxes under the Federal
Insurance Contributions Act (FICA).

What is a property tax?

A tax on property, such as land, buildings
(including homes), and motor vehicles.

What is a sales tax?

Tax on purchased goods and services

What is an excise tax?

– Taxes collected from the seller or retailer
and as such often remain hidden in the
price of a product or service

What are the two most

important things to know about

taxes?

- Without taxes it would be hard to pay for
many of the benefits of being a member of a
community

- The amount of taxes you pay and what you pay

those taxes on will vary depending upon where
you live and your income