Income and Payroll Taxes. What are income tax and payroll tax?

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1 ? Name 17.1 Essential Question Income and Payroll Taxes What are income tax and payroll tax? Personal Financial Literacy 5.10.A Also 5.3.K MATHEMATICAL PROCESSES 5.1.A, 5.1.B Unlock the Problem A tax is money paid to the government in exchange for services, such as road maintenance and police protection. Income tax is based on the amount of money you earn, or your income. Federal income tax is paid to the United States government. Some states and cities also have an income tax. Workers throughout the United States pay federal income tax, but state or city income taxes vary across the country. Workers also pay other taxes for government support programs, such as medical care. Sometimes, these taxes are paid directly to the government. Other times, an employer will withhold these taxes from an employee s earnings and pay the government. The total tax an employer withholds is called payroll tax. The amount in an employee s paycheck shows the pay after taxes. Calculate pay after taxes. Mia earns $600 per week. When she gets her paycheck, it includes a pay stub that shows total earnings and payroll tax. Find Mia s pay after taxes. Circle the taxes taken out of Mia s paycheck. Add the taxes to calculate the payroll tax. Mia Goodwin July 1 July Total earnings $ Federal income tax $75.45 State income tax $15.17 Other taxes $37.20 $ + $ + $ = $ Subtract the payroll tax from her total earnings. $600 $ = $ So, Mia s pay after taxes is $. Math Talk Mathematical Processes Evaluate Reasonableness How can you check that the amount you found for Mia s pay after taxes is correct? Module

2 Example Rob earns $500 per week. He has payroll tax taken out of his earnings. Unfortunately, Rob spilled kale juice on his pay stub, covering up some of the values. He knows the Other taxes are $10. How much state income tax was withheld from Rob s earnings? Rob Alexander May Total earnings $ Federal income tax $ State income tax $00.00 Other taxes $ $ Find the payroll tax withheld from Rob s total earnings. $ $ = $. Add the federal income tax and other taxes. $ + $ = $. Subtract the total of federal income tax and other taxes from the payroll tax to find the state income tax. $ $ or $. So, Rob s state income tax is $ Share and Show Rita works in a state with no state income tax. Use Rita s pay stub for Calculate Rita s payroll tax. $ + $ = $ 2. Calculate Rita s pay after taxes. Rita Logan September 2001 Total earnings $ Federal income tax $ Other taxes $15.55 $ $ = $ Problem Solving 3. Write Math Explain how you can calculate payroll tax if you know total earnings and pay after taxes. 618

3 Name Problem Solving 4. Leticia pays federal income tax of $18 for every $100 she earns. How much will she pay as federal income tax if she earns $500? Explain. 5. Michelle works for 33 hours this week. She earns $10 per hour. Her pay after taxes is $ How much does she pay in payroll tax? 6. Multi-Step Oliver lives in a state with no state income tax. He pays $150 in payroll tax each week. If the federal income tax is 0.75 of the payroll tax, how much are the other taxes? 7. Multi-Step The pay stub shows the payroll tax withheld from Maeve s paycheck. If Maeve gets paid twice a month, how much does she pay in payroll tax in one month? Explain. Maeve Kelley January Total earnings $ Federal income tax $ State income tax $18.50 Other taxes $17.35 Module 17 Lesson 1 619

4 Daily Assessment Task Mathematical Processes Fill in the bubble completely to show your answer. 8. Arman works in a state with no state income tax. He earns $625 each week. He pays $38.45 in other taxes. His pay after taxes is $ How much federal income tax does he pay? A $38.45 B $76.90 C $86.94 D $ Communicate Miranda earns $ at her part-time job. She pays $98.12 in federal income tax and $12.00 in other taxes. How can you determine Miranda s pay after taxes? A B C D Subtract the sum of the taxes from the total earnings. Subtract the amount earned from the sum of the taxes. Add all the taxes. Subtract only the federal income tax from the total earnings. 10. Multi-Step Joe has two part-time jobs. At his first job, he earned $200 and paid $42 in payroll tax. At his second job he earned $175 and paid $24 in payroll tax. What is his pay after taxes? A $158 C $351 B $309 D $303 TEXAS Test Prep 11. Mark s pay after taxes is $ If his total earnings are $1,100, how much does Mark pay in payroll tax? A $1, B $ C $ D $855.08

5 Homework and Practice Name Personal Financial Literacy 5.10.A Also 5.3.K MATHEMATICAL PROCESSES 5.1.A, 5.1.B 17.1 Income and Payroll Taxes 1. Write an equation to show how to calculate the total amount Sam pays in payroll tax. 2. Use your solution in Exercise 1 to write an equation to calculate Sam s pay after taxes if his total earnings are $800. Sam Brown January 6405 Total earnings $ Federal income tax $ State income tax $24.25 Other taxes $ Explain how you can calculate total earnings if you know the payroll tax and the pay after taxes. Problem Solving 4. The pay stub at right shows Darla s earnings and taxes this week. Darla says her pay after taxes will be an amount greater than $600. Explain how you can use estimation to decide if Darla is correct. Darla Moore March Total earnings $ Federal income tax $ State income tax $30.15 Other taxes $ Adolfo earned $650 last week. He paid $97.50 in federal income tax. He paid one third that amount for state income tax and other taxes combined. What was Adolfo s pay after taxes? Explain how you found your answer. Module 17 Lesson 1 621

6 Lesson Check TEXAS Test Prep Fill in the bubble completely to show your answer. 6. Martina earns $4,000 per month. Each month, she pays $680 in federal income tax, $160 in state income tax, and $79 in other taxes. What is Martina s pay after taxes each month? A $3,160 B $3,081 C $3,761 D $2, Lacey earns $680 each week. She pays $91.80 in federal income tax. The other taxes are $ Her pay after taxes is $ How much does Lacey pay in state income tax? A $74.80 B $38.60 C $ D $ Which statement about total earnings and pay after taxes is correct, if the payroll tax is withheld? A is greater than total earnings. 9. Each week, Kelly pays $68.45 in federal income tax, $22.81 in state income tax, and $18.75 in other taxes. Which is the best estimate for the payroll tax Kelly pays each month? A $440 B C D is less than total earnings. Total earnings and pay after taxes are the same. Total earnings are less than the pay after taxes. B $110 C $280 D $ Multi-Step Each week, Desiree earns $925 and pays $148 in payroll tax. How long does it take Desiree to earn at least $3,000 after taxes? 622 A B C D 4 weeks 3 weeks 5 weeks 7 weeks 11. Multi-Step Brian works 24 hours this week. His earns $9.25 per hour. He pays $37.30 in payroll tax. He deposits half of his pay after taxes in his savings account. He deposits the other half of his pay after taxes in his checking account. How much money is deposited into each account? A $ B $ C $92.35 D $46.55