• What items must be included in What items must be included in your notebook ?your notebook ?

• When is the notebook due?When is the notebook due?• When is your homework dueWhen is your homework due• If you are absent on the day of a If you are absent on the day of a

test, how long do you have to make test, how long do you have to make it up?it up?

• What must be on warm up and What must be on warm up and notes papers? notes papers?

• What must be on homework What must be on homework papers?papers?

• Tests account for what % of your Tests account for what % of your total grade?total grade?

• When can you use electronic When can you use electronic devices?devices?

• What is the most important change What is the most important change that needs to be made? that needs to be made?

2.1 Federal Income Tax , Slide 2 of 43

TIMES UP

• What items must be included in your What items must be included in your notebook ?notebook ?

• When is the notebook due?When is the notebook due?• When is your homework dueWhen is your homework due• If you are absent on the day of a If you are absent on the day of a

test, how long do you have to make test, how long do you have to make it up?it up?

• What must be on warm up and notes What must be on warm up and notes papers? papers?

• What must be on homework papers?What must be on homework papers?• Tests account for what % of your Tests account for what % of your

total grade?total grade?• When can you use electronic When can you use electronic

devices?devices?• What is the most important change What is the most important change

that needs to be made? that needs to be made?

2.1 Federal Income Tax , Slide 4 of 43

2.1 Federal Income Tax , Slide 5 of 43

2.1 Federal Income Tax , Slide 6 of 43

2.1 Federal Income Tax , Slide 7 of 43

2.12.1Federal Federal Income Income

TaxTax

2.1 Federal Income Tax , Slide 8 of 43

Section ObjectiveSection Objective

The focus of this The focus of this lesson is to learn lesson is to learn how to use tables how to use tables to find the to find the amount withheld amount withheld for federal for federal income taxincome tax

2.1 Federal Income Tax , Slide 9 of 43

Federal Income Tax (FIT)

Money withheld by an employer from an

employee’s paycheck

Key Words to Know Key Words to Know

2.1 Federal Income Tax , Slide 10 of 43

FITIs calculated using the tables in the back of the book. The tables

are displayed based on WEEKLY salary. There are separate tables for married and singles.

2.1 Federal Income Tax , Slide 11 of 43

AllowancesThe number of

dependants you claim for purpose of

calculating federal income taxes.

Key Words to Know Key Words to Know

2.1 Federal Income Tax , Slide 12 of 43

WithholdingThe amount of money

that is “held” from your paycheck.

Key Words to Know Key Words to Know

2.1 Federal Income Tax , Slide 13 of 43

Annual SalaryThe salary that you

make YEARLY. Bi-weekly

Every other week

Semi-monthlyTwice a month

2.1 Federal Income Tax , Slide 14 of 43

Gross Pay The amount of your

salary before deductions.Net Pay

The amount of your paycheck.

2.1 Federal Income Tax , Slide 15 of 43

If you get paid every week, how many If you get paid every week, how many checks will you get in annually?checks will you get in annually?

If you get paid every month, how many If you get paid every month, how many checks will you get in annually?checks will you get in annually?

If you get paid every other week, how many If you get paid every other week, how many checks will you get in annually?checks will you get in annually?

If you get paid twice a month, how many If you get paid twice a month, how many checks will you get in annually?checks will you get in annually?

2.1 Federal Income Tax , Slide 16 of 43

If you get paid $300 every week, what If you get paid $300 every week, what would be your annual salary?would be your annual salary?

If you get paid $62,000 annually, what If you get paid $62,000 annually, what would be your monthly pay?would be your monthly pay?

If you get paid $2,500 every other week, If you get paid $2,500 every other week, what would be your annual salary?what would be your annual salary?

If you get paid $40,000 annually, what If you get paid $40,000 annually, what would be your semi-monthly pay?would be your semi-monthly pay?

2.1 Federal Income Tax , Slide 17 of 43

If Mike makes $125 per week, he is single and If Mike makes $125 per week, he is single and claims 1 allowance, what is his weekly FIT claims 1 allowance, what is his weekly FIT

withholding?withholding?

2.1 Federal Income Tax , Slide 18 of 43

If Paul makes $985 per week, is married and If Paul makes $985 per week, is married and claims 6 allowance, what is his weekly FIT claims 6 allowance, what is his weekly FIT withholding?withholding?

2.1 Federal Income Tax , Slide 19 of 43

Carla Garza’s annual pay is $39, 600. She is married and claims 2 allowances—herself and her husband.

What amount will be withheld from Garza’s

pay for FIT?

Example 1 Example 1

2.1 Federal Income Tax , Slide 20 of 43

WHAT DO I DO NOW?

HER PAY IS ANNUAL, BUT THE TABLE IS IN WEEKS…..

2.1 Federal Income Tax , Slide 21 of 43

Example 1 AnswerExample 1 AnswerStep 1:

Calculate Weekly Salary.

$761.54

2.1 Federal Income Tax , Slide 22 of 43

Step 2:

Find the income range from the federal tax tables

2.1 Federal Income Tax , Slide 23 of 43

Lance Han’s annual gross pay is

$31,252. He is single and claims 4

allowance.

What amount will be withheld from Han’s

pay for FIT?

Example 2 Example 2

2.1 Federal Income Tax , Slide 24 of 43

Example 1 AnswerExample 1 AnswerStep 1:

Calculate Weekly Salary.

$601.00

$31,252 ÷ 52 =

2.1 Federal Income Tax , Slide 25 of 43

Step 2:

2.1 Federal Income Tax , Slide 26 of 43

Employee Weekly Income

Allowances Amount Withheld

D. Caine 390.50 1

A. Kim 435.95 2

D. Cadena 399.95 2

H. Nguyen 444.23 1

G. Ginn 382.23 1

K. Morris 421.98 0

C. Dubinski

371.09 4

Assuming they are married, complete the following table:Assuming they are married, complete the following table:

2.1 Federal Income Tax , Slide 27 of 43

2.2 STATE INCOME TAX

2.1 Federal Income Tax , Slide 28 of 43

The focus of The focus of this lesson is to this lesson is to learn how to learn how to calculate state calculate state income tax income tax based on a based on a straight percent straight percent basisbasis

SECTION OBJECTIVE

2.1 Federal Income Tax , Slide 29 of 43

personal exemptions (p.

119)

The number of people an employee

supports, on which taxes are

based

KEY WORDS TO KNOW

2.1 Federal Income Tax , Slide 30 of 43

Taxable wages

ONLY used for state tax

purpose , taxable wages are your wages minus (-) your personal exemptions

KEY WORDS TO KNOW

2.1 Federal Income Tax , Slide 31 of 43

How do I calculate taxable wages

TaxableWages

Annual Gross PayPersonal Exemptions

=–

2.1 Federal Income Tax , Slide 32 of 43

Patricia Line’s gross pay is $65,800 a year.

Line takes a married exemption for herself and

her husband.

What are her taxable wages?

2.1 Federal Income Tax , Slide 33 of 43

Tomoko Nakazawa.Earns $38,657

annually.Married, no dependents.

What is the amount of her personal exemptions?

What are her taxable wages?

2.1 Federal Income Tax , Slide 34 of 43

Stephanie Vanderham.Earns

$96,315annually.Married, 4 children.

What is the amount of her personal exemptions?

What are her taxable wages?

2.1 Federal Income Tax , Slide 35 of 43

How do I calculate annual taxes withheld

Annual Taxes Withheld

Taxable Wages Tax Rate

=

X

2.1 Federal Income Tax , Slide 36 of 43

Patricia Line’s gross pay is $65,800 a year. The state

income tax rate is 3 percent of taxable wages.

Line takes a married exemption for herself and her husband. How much is withheld from her gross pay for state income tax

within the year.

EXAMPLE 1

2.1 Federal Income Tax , Slide 37 of 43

EXAMPLE 1 (CONTD)

Personal Exemptions

Single: $2,000

Married: 4,000

Each Dependent: 2,000

2.1 Federal Income Tax , Slide 38 of 43

Step 1:

Find the taxable wages.

Annual Gross Pay – Personal Exemptions

$65,800.00 – $4,000.00 =

$61,800.00

EXAMPLE 1 ANSWER:

2.1 Federal Income Tax , Slide 39 of 43

Find the annual tax withheld.

Taxable Wages × Tax Rate

$61,800.00 × 3% =

$1,854.00

How much monthly?

$154.50

EXAMPLE 1 ANSWER:

2.1 Federal Income Tax , Slide 40 of 43

Tomoko Nakazawa.Earns $38,657

annually.Married, no dependents.

State Tax rate of 5%How much does she pay annually in state

tax?

EXAMPLE 2

2.1 Federal Income Tax , Slide 41 of 43

Annual Tax $1,732.85

EXAMPLE 1 ANSWER:

If she was paid weekly, how much would be withheld each paycheck?

2.1 Federal Income Tax , Slide 42 of 43

Paul Chamello earns $168,000. He is single.

His personal exemptions include himself and his five

children. The state tax rate is 2.5 percent of

taxable income.

What amount is withheld yearly for state income tax?

ON YOUR OWN 1

2.1 Federal Income Tax , Slide 43 of 43

If her gets paid MONTHLY, how much withholdings each pay check? $325.00

EXAMPLE 1 ANSWER:

Yearly State Income Tax$3,900