Personal Finance: Tax Unit Review

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Primary purpose of income tax

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To fund government programs and services

Front

Considered earned income

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Wages from a part-time job

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Employers provide the W-2 Form to employees for tax purposes by January 31st each year.

Back

The W-2 Form is used to report wages and taxes withheld.

Front

If someone earns $45,000 annually and is in the 22% tax bracket, their marginal tax rate is 22%.

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The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify.

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FICA tax is used for

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Social Security and Medicare

Front

The effective tax rate for someone earning $2,000 and paying $300 in federal taxes is

Back

15%

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Sales tax

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Varies based on location

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Tax credits

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Reduce the taxes owed by a taxpayer

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Property taxes

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Vary depending on where you live and the size of the property

Front

Local public school funding

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Most likely paid for in part by Property Tax