Taxes and Social SecurityTaxes and Social Security

Understanding TaxesUnderstanding Taxes

Taxes are a form of payment to the government Taxes are a form of payment to the government to support government services.to support government services.

There are three types of governmentThere are three types of government FederalFederal

Runs the countryRuns the country

StateState Manages its own state Manages its own state

LocalLocal Counties, cities, and townsCounties, cities, and towns

The IRS The IRS

Internal Revenue Internal Revenue ServiceService Collects federal taxes Collects federal taxes

and oversees the federal tax systemand oversees the federal tax system Website provides all tax forms needed to file Website provides all tax forms needed to file

taxestaxes Taxes paid to the IRS go into the U.S. Taxes paid to the IRS go into the U.S.

Treasury.Treasury.

Types of TaxesTypes of Taxes

Income TaxIncome Tax Social Security TaxSocial Security Tax Sales TaxSales Tax Property TaxProperty Tax

Income TaxIncome Tax Tax you pay on the Tax you pay on the

amount of money you amount of money you earn.earn.

It may be from a job or It may be from a job or other source of income other source of income such as interest on such as interest on savings or/and savings or/and investments.investments. Calculated as a percentage Calculated as a percentage

of your total income earned. of your total income earned. This is the federal This is the federal

government’s main source government’s main source of money.of money.

Social Security TaxSocial Security Tax

Tax you pay so that you can receive Tax you pay so that you can receive certain benefits when you retire.certain benefits when you retire.

Sales TaxSales Tax

Tax paid when Tax paid when you purchase an you purchase an item or service.item or service.

Calculated as a Calculated as a percentage of the percentage of the price.price.

Goes to the state or Goes to the state or local government.local government.

Property TaxProperty Tax

Usually paid yearly to the Usually paid yearly to the state or local government.state or local government.

Based on the value of Based on the value of property – land or building property – land or building – owned.– owned.

The main source of money The main source of money for local government.for local government.

Where do tax dollars go?Where do tax dollars go?

EducationEducation Includes public schools and librariesIncludes public schools and libraries

TransportationTransportation Roads, mass transit, ferries, airports, etc.Roads, mass transit, ferries, airports, etc.

SafetySafety Includes law enforcement and fire protectionIncludes law enforcement and fire protection

HealthHealth Hospitals, medical research, etc.Hospitals, medical research, etc.

MilitaryMilitary PostalPostal

Social SecuritySocial SecurityA program that provides benefits A program that provides benefits

for people of all agesfor people of all ages

Social Security NumberSocial Security Number

What is it for?What is it for? The government uses it to keep track The government uses it to keep track

of your contributions and work history.of your contributions and work history. Your employer will need it when you Your employer will need it when you

are hired.are hired. Required to file Required to file

taxes.taxes.

Types of BenefitsTypes of Benefits

DisabilityDisability RetirementRetirement MedicareMedicare Unemployment Unemployment Worker’s CompWorker’s Comp

Disability BenefitsDisability Benefits

Paid to someone who cannot work due to Paid to someone who cannot work due to a physical or mental conditiona physical or mental condition

Based on the worker’s average earningsBased on the worker’s average earnings

Retirement BenefitsRetirement Benefits

Paid to workers who retirePaid to workers who retire Higher earnings = Higher benefitsHigher earnings = Higher benefits Current retirement age is 65Current retirement age is 65

MedicareMedicare

Pays medical costs Pays medical costs for people who are for people who are over 65.over 65.

Covers hospitalization Covers hospitalization and other medical care.and other medical care.

Unemployment BenefitsUnemployment Benefits

Provides temporary Provides temporary income to workers who income to workers who have lost their jobs. have lost their jobs.

To be eligible, you must To be eligible, you must have worked for a certain have worked for a certain length of time and not length of time and not have lost your job through have lost your job through fault of your own.fault of your own.

Funded by taxes both the employer and Funded by taxes both the employer and employee pay.employee pay.

Worker’s CompensationWorker’s Compensation

Paid to workers Paid to workers injured on the job.injured on the job.

Also, may be paid to Also, may be paid to dependents of dependents of workers killed on the workers killed on the job.job.

May include medical May include medical care and disabilitycare and disability