A Federal Payroll Tax That Supports Retired Workers is

A Federal Payroll Tax That Supports Retired Workers is



Curriculum Expanse(s)

  • Technology
  • Civics/Government
  • Family unit and Consumer Sciences
  • History/Social Studies
  • Economics


Purpose

To help students understand the withholding of payroll and income taxes from pay.


Objectives

Students will be able to

  • identify the types and uses of payroll taxes.
  • explain how federal income taxes are used.
  • distinguish between gross and internet pay.
  • describe how employers withhold and remit taxes.
  • explain the purpose of Course W-4.


Background

Social Security taxation and Medicare tax are types of payroll taxes. Social Security tax, also known equally the “Federal Insurance Contributions Act” (FICA) revenue enhancement, provide benefits for retired workers, disabled workers, and dependents of both. The Medicare tax is used to provide medical benefits for certain individuals when they attain age 65. Workers, retired workers, and the spouses of both are eligible to receive Medicare benefits upon reaching age 65. Federal income taxes are used to provide for national programs such as (a) national defense; (b) veterans and foreign affairs; (c) social programs; (d) concrete, human being, and customs development; (e) law enforcement; and (f) interest on the national debt. Employers withhold payroll taxes and income taxes from employees’ pay. Employees complete Class W-4, Employee’s Withholding Assart Certificate, so that employers know how much income tax to withhold from their employees’ pay.


Central Terms

Federal income tax

The federal government levies a revenue enhancement on personal income. The federal income tax provides for national programs such as (a) national defense; (b) Veterans and foreign diplomacy; (c) social programs; (d) physical, human, and community development; (e) law enforcement; and (f) involvement on the national debt.

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Form Westward-4, Employee’due south Withholding Assart Certificate

Completed by the employee and used by the employer to determine the amount of income tax to withhold.

Medicare tax

Used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of both are eligible to receive Medicare benefits upon reaching age 65.

Payroll taxes

Include Social Security and Medicare taxes.

Social Security tax

Provides benefits for retired workers and their dependents too as for the disabled and their dependents. Too known every bit the “Federal Insurance Contributions Deed” (FICA) taxation.


Opening the Lesson

Mitt out Fact Sheet-Payroll Taxes and Federal Income Taxation Withholding. Use the post-obit questions to prompt students to share what they know about withholding:

  • Tin can you explain why a worker earns $100 but receives a paycheck for less than $100? (The $100 is gross pay, and the amount of the cheque is cyberspace pay.)
  • What happens to the amount earned but non received by the employee? (Some of the difference consists of payroll taxes and income taxation withholding. The employer sends these taxes to the federal government.)
  • How are payroll taxes used? (Social Security taxes are used to provide for retired workers, disable workers, and dependents of both. Workers, retired workers, and the spouses of both are eligible to receive Medicare benefits upon reaching age 65.)
  • How are federal income taxes used? (Federal income taxes are used to pay for national defense; veterans and strange affairs; social programs; physical, man, and customs development; law enforcement; and interest on the national debt.)
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Note: Refer students who may want to work independently on this module to Student Lesson-Payroll Taxes and Federal Income Taxation Withholding.


Developing the Lesson

Direct students to Tax Tutorial-Payroll Taxes and Federal Income Taxation Withholding. Explicate that employers use the Social Security taxation charge per unit (vi.ii percent), the Medicare tax rate (1.45 percent), and the information on Form W-4 to compute the amount to withhold from employee pay. Emphasize that employers practise not keep the amounts withheld from employee pay; instead, the employers send the withholding to the federal regime.

Online Activity

Direct students to Simulation ane-Completing Form Westward-4. Explicate to students that they volition use the information provided in the exercise to complete Form W-iv for Lawrence Red Owl, a retail store manager.


Last the Lesson

Subsequently students take completed Tax Tutorial-Payroll Taxes and Federal Income Tax Withholding and Simulation 1-Completing Course Westward-4, ask them whether they accept questions about payroll taxes and income tax withholding. To ensure that they understand the difference between gross pay and internet pay, ask the following questions:

  • Explain how employees pay Social Security and Medicare taxes. (The employer withholds payroll taxes from employee pay.)
  • Explain how the employer knows how much income tax to withhold. (The employer refers to Grade W-4 to calculate the income taxation withholding.)

Assessment

As a final review, summarize the major lesson points. Remind students that employers withhold payroll taxes from employee pay. Employers use Form W-four to decide the amount of income taxation to withhold. Employers send the withheld taxes to the federal government. When the students are comfortable with the material, have them complete Assessment-Payroll Taxes and Federal Income Tax Withholding.

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A Federal Payroll Tax That Supports Retired Workers is

Source: https://apps.irs.gov/app/understandingTaxes/teacher/hows_mod01.jsp#:~:text=Social%20Security%20tax%2C%20also%20known,when%20they%20reach%20age%2065.