FSP FINAL REVIEW

FSP FINAL REVIEW - FSP FINAL REVIEW Chapter 18 -Tax...

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FSP FINAL REVIEW Chapter 18 -Tax sheltering: the tax laws allow certain income to remain exempt from income taxes in the current year or permit an adjustment, reduction, deferral, or elimination of income tax liability -Retirement: the time in life when the source of most of one’s income changes from earned income (such as salary or wages) to employer-based retirement benefits, private savings & investments, & perhaps income from Social Security & part-time employment -FICA taxes: Social Security taxes withheld from wages; amounts withheld are put into the SS trust fund accounts from which benefits are paid to current program recipients -By 2030, retirement needs will probably exceed the taxes being collected -Wage earners pay both FICA & Medicare taxes to the SSA -Maximum taxable yearly earnings (MTYE): maximum amount of income that the FICA tax is applied (currently $97,500); 12.4% total (½ empee, ½ emper) -Wage earners also pay 1.45% Medicare tax on ALL earnings (no maximum or MTYE)
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FSP FINAL REVIEW - FSP FINAL REVIEW Chapter 18 -Tax...

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