Financial Literacy Taxes and Insurance. Banking Follow Up Checking Accounts: Emily, Jocelyn, Jarek Savings Accounts: Robert, Anastasia, Greg Money Markets.

Financial

Literacy

Taxes and Insurance

Banki

ng F

ollo

w

Up

Checking Accounts:Emily, Jocelyn, JarekSavings Accounts:Robert, Anastasia,

Greg

Money Markets & CD’sSarah, Jonah, Alex

Taxes

What

are

the

diff

ere

nt

types

of

taxe

s?

Taxes on your Income• Federal Taxes• State and Local Taxes• FICA Taxes

Taxes on your Investment Gains• Capital Gains Taxes

Vid

eo

YouTube - Personal Inco

me Taxes - A Visual Expl

anation

Taxe

s on y

our

Inco

me

If you earn money you

owe certain taxes on

that money.

Money is withheld from

your paycheck and automatically sent to the

government for these

taxes.

You then file a tax return

by April 15 of the next

year to calculate your

taxes and see if you’ve

had enough withheld.

Taxe

s on y

our

inco

me

This applies to Federal and

State Taxes

It does not apply to FICA

Taxes

FICA Taxes are taxes for:• Social Security (6.2%)• Medicare (1.45%)

The F

edera

l Tax

Retu

rnFo

rm: 1040

The F

edera

l Tax

Retu

rnFo

rm: 1040

The F

edera

l Tax

Retu

rnFo

rm: 1040

The F

edera

l Tax

Retu

rnFo

rm: 1040

In P

lain

Englis

h

Income

Taxable Income

Deductions

Federal Tax

Antonio’s Salary: $43,000Interest Earned on CD: $300

Total Income: $43,300

Standard Deduction: $5,650Exemption Deduction: $3,650

Total Deductions:$9,300

Income – Deductions: $34,000

The first $8,375 is taxed at 10% $837From $8,375 to $34,000 is taxed at 15% $3,844

Federal Tax: $4,681

In P

lain

Englis

h

Federal Tax

Federal Tax: $4,681

Federal Tax WithheldFederal Tax Withheld:

$5,000

Refund or Amount DueAmount withheld – Federal Tax:

Refund of $319

Exa

mple

sLet’s review Antonio’s

tax situation

Insurance

What

is

insu

rance

?

Definition:

An agreement by

which a company provides a guarantee of

repayment for a specific

loss in return for a customer’s payment of

premium.

What

is

insu

rance

?

Basic Example:If you pay your monthly

premium for your car

insurance, when you get

in an accident your insurance company will

help fix your vehicle.

Diff

ere

nt

Types

of

Insu

rance

Health Insurance:If you get sick and need to

see a doctor, your health insurance will help you pay the cost.

Car Insurance:If you get in a car accident, your car insurance will help

fix your car.

Home Insurance:If someone breaks into your

house, your home insurance will help pay to replace the items that were stolen.

Diff

ere

nt

Types

of

Insu

rance Life Insurance:If you pass away, the

insurance company will pay money to your family.

Disability Insurance:If you become disabled and cannot work, the insurance company will pay money to

you every month to help you pay bills.

Why

is Insu

rance

Im

port

ant?

If you drive a car…You are required to have insurance.

If you own a home…You are required to have insurance.

If you ever get sick…Not having health insurance is

the # 1 cause of bankruptcy.

If you are married, have kids, or in debt…

Life Insurance can help replace the income that your family depends on, or help pay off debt that your loved ones would still have.

Car

Insu

rance

6 Components of Car

Insurance

1) Bodily Injury Liability

2) Property Damage Liability3) Medical Payments

4) Collision5) Comprehensive6) Un/Underinsured

Motorist

Homework