Chapter 2 Notes.pdf - What Youu2019ll Learn Section 2-1...

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What You’ll Learn Section 2-1 Read tables to find the amount withheld for federal income tax. Section 2-2 Compute the state taxes on a straight percent basis. Section 2-3 Determine the state taxes on a graduated income basis. Section 2-4 Work out the amount of income withheld for Social Security and Medicare taxes. Section 2-5 Calculate the deduction for group insurance. Section 2-6 Figure out net pay per pay period. When Will You Ever Use This? If you earn money, you pay taxes . . . if you don’t, you could end up in jail. Set a realistic budget when you know the amount of taxes and insurance withheld from your paycheck. Key Words to Know federal income tax personal exemptions graduated income tax Social Security Medicare group insurance net pay 114 Chapter 2 Net Income To learn more about net income, visit busmath.glencoe.com .
Money. Freedom. Independence. Oh, how you’ve wanted these for so long. So had Jack Myers, a twenty-something who just graduated from an apprenticeship program in Peoria, Illinois. In this chapter you’ll read a story about a young man who’s stepping out into the real world. He’s finding out financial freedom isn’t exactly working out as he had expected. Read on. Go to . . . Where’s All My Money? . . . . . . . . . p. 116 Who Else Is Taking My Money? . . . . p. 119 Can You Live without Paying Taxes? . . . . . . . . . . . . . p. 122 What Else Aren’t You Telling Me? . . p. 124 I Thought Mom and Dad Paid for That . . . . . . . . . . . . . . . . . p. 126 Live in the Now . . . or Not . . . . . . p. 128 Analyze the Story . . . . . . . . . . . . p. 133 Jack’s Jackpot 115
Read tables to find the amount withheld for federal income tax. 116 Chapter 2 Net Income Federal Income Tax Federal prosecutors convict those who fail to file a tax return. The average sentence is more than three years. Where’s All My Money? Jack Myers blinks, rubs his eyes, and blinks again. “Wait. Hey, there’s no $1,200 in this paycheck.” His brother Jon, a certified public accountant, has been trying to tell him that he needs to take into account withholdings from his pay- check. One large chunk of the money he thought he was going to get actually goes to paying FIT. “This is going to affect my truck payment,” Jack said. “I thought there was going to be more.” Draw Conclusions What do you do when your bills are more than your paycheck amount? Continued on page 119 Jack’s Jackpot Federal taxes are necessary to keep the government agencies and services afloat. Employers are required by law to withhold a certain amount of your pay for (or FIT). The Internal Revenue Service (IRS) provides employers with tables that show how much money to withhold. The amount withheld depends on your income, marital status, and withholding allowances. You may claim 1 allowance for yourself and 1 allowance for your spouse if you are married. You may claim additional allowances for any others you support. Use table Married Persons Weekly Payroll on page 790 for Examples 1 and 2.

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