Taxes

Taxes

By Victoria Gianatiempo

is the amount earned before any type of deduction is taken away from your pay.

Gross Income

Definitions:

• Income Tax

• Employment Insurance (E.I.) Company pension plans

• Health and Dental Insurance Extended Health and Dental Insurance

• Life insurance

• Union Dues

• Donations to Charities

• Registered Education Savings Plans (RESP)

• Registered Retirement Savings Plans (RRSP)

There are all types of deductions that can come off earnings.

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Some deductions that can occur are as follows.

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Definitions

The amount of pay left after all deductions have been taken off.

Net Income

Definitions:

Example 1

Brianna earns $425 per week working for a reality company. The deductions from her weekly pay are:

​EI $10.12

Income Tax $62.86

Health Plan $8.91

Company Pension Plan $15.23

​Determine Brianna’s

a. Gross Pay

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b. Total Deductions

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c. Net Pay

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Noah earns $1824 per month working at a bank.

The deductions from his monthly pay are:

EI $112.45

Income Tax $412.74

Health Plan $15.12

Company Pension Plan $33.18

Life Insurance $2.45

RRSP contribution $100.00

Union Dues $17.25

Determine Noah's GROSS PAY

Fill in the Blanks

Noah earns $1824 per month working at a bank.

The deductions from his monthly pay are:

EI $112.45

Income Tax $412.74

Health Plan $15.12

Company Pension Plan $33.18

Life Insurance $2.45

RRSP contribution $100.00

Union Dues $17.25

Determine Noah's TOTAL DEDUCTIONS

Fill in the Blanks

Noah earns $1824 per month working at a bank.

The deductions from his monthly pay are:

EI $112.45

Income Tax $412.74

Health Plan $15.12

Company Pension Plan $33.18

Life Insurance $2.45

RRSP contribution $100.00

Union Dues $17.25

Determine Noah's NET PAY

Example 2

Kristen earns $918.38 per semi-monthly working at a travel agency.

The deductions from her semi-monthly pay are: EI $58.72

Income Tax $218.54

Health Plan $7.12

Life Insurance $1.17

RESP contribution $25.00

Union Dues $5.44

​Determine Kristen's

a. Gross Pay

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b. Total Deductions

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c. Net Pay

Fill in the Blanks

If Cliff's gross pay is $261.23 and his deductions are $44.57. How much is his net income?

Fill in the Blanks

If Elaine's deductions are $71.45 and her net pay is $419.83. What is her gross income?

Fill in the Blanks

If Lester's gross pay is $518.24 and her net pay is $388.16, what are Lester's deductions?

Example 3

Ashlee works 36 hours per week. Her net income is $249 and her deductions are $91.12. What is her hourly rate of pay?

Federal Income Tax

The federal income tax is not calculated by summing up all that an individual earns and then taking a fixed percentage of that income. Instead, the federal tax system is progressive. That means the more income an individual makes, the greater the percentage of it is taxed.

Federal Income Tax

The U.S. government considers the income of a family (or individual) to include the sum of any money earned from a husband’s or wife’s jobs, and money made from their personal businesses or investments. The taxes for a household (i.e., an individual or family) are not computed from the income; rather, they are computed from the household’s taxable income. For many families, the household’s taxable income is simply the household’s income minus exemption deductions and minus standard deductions:

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(taxable income) = (income) − (exemption deduction) − (standard deduction)

Example 4

Find the taxable income of a single person with no kids who has an income of $55,000.

Example 5

Find the taxable income of a married couple with 2 children who have a combined income of $55,000.

Open Ended

Find the taxable income of a married couple with 1 child who has a combined income of $23,000.

Open Ended

Find the taxable income of a single person with no kids who has an income of $44,000.

Example 6

Abe is single. His taxable income is $83,492. How much does Abe owe in taxes?

Example 7

Roberta is married and ! ling a joint return with her husband Steve. Their combined taxable income is $80,997. How much do they owe in taxes?

Open Ended

Determine the tax for someone filing single with a taxable income of $80,602

Open Ended

Determine the tax for someone filing head of house hold with a taxable income of $83,572

Open Ended

Determine the tax for someone married filing jointly with a taxable income of $77,777

Open Ended

Determine the tax for someone married filing separately with a taxable income of $83,050

Example 8

Calculate the tax for each of the taxable incomes of a head of household taxpayer.

​a. $200,000 b. $23,872 c. $121,890

Multiple Choice

REVIEW: What is the definition of "wage"

• Money paid to an employee for work done, usually figured on an HOURLY basis.

• Total pay earned before deductions.

• Amount of pay left after deductions have been taken out.

  AKA: Take home pay​

• A government program that provides economic assistance to people faced with unemployment, disability, or old age.

Multiple Choice

REVIEW:What is the definition of "Gross Pay"

• Money paid to an employee for work done, usually figured on an HOURLY basis.

• Total pay earned before deductions.

• Amount of pay left after deductions have been taken out.

  AKA: Take home pay​

• A government program that provides economic assistance to people faced with unemployment, disability, or old age.

Multiple Choice

REVIEW: What is the definition of "FICA"

• Money paid to an employee for work done, usually figured on an HOURLY basis.

• Total pay earned before deductions.

• Amount of pay left after deductions have been taken out.

  AKA: Take home pay​

• The amount of money you have earned so far this year.