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Students will certainly be may be to

identify the species and offers of payroll taxes.explain exactly how federal revenue taxes room used.distinguish between gross and also net pay.describe just how employers withhold and also remit taxes.explain the objective of kind W-4.

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Social protection tax and Medicare taxes are varieties of payroll taxes. Social security tax, also known as the "Federal Insurance contributions Act" (FICA) tax, carry out benefits because that retired workers, disabled workers, and dependents of both. The Medicare taxes is offered to carry out medical services for specific individuals once they reach age 65. Workers, retired workers, and also the pair of both room eligible to receive Medicare benefits upon reaching period 65. Federal earnings taxes are supplied to carry out for national programs such together (a) national defense; (b) veterans and also foreign; (c) social programs; (d) physical, human, and also community development; (e) law enforcement; and (f) interest on the nationwide debt. Labor withhold payroll taxes and also income taxes from employees" pay. Employee complete type W-4, Employee"s Withholding allowance Certificate, so the employers know just how much earnings tax to withhold from your employees" pay.

Key Terms

Federal income tax

The federal federal government levies a tax on an individual income. The federal revenue tax gives for nationwide programs such as (a) national defense; (b) Veterans and also foreign; (c) society programs; (d) physical, human, and also community development; (e) regulation enforcement; and (f) interest on the nationwide debt.

Form W-4, Employee"s Withholding allowance Certificate

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

Medicare tax

Used to administer medical benefits for certain individuals once they reach period 65. Workers, retirement workers, and the couple of both are eligible to get Medicare services upon reaching age 65.

Payroll taxes

Include social Security and Medicare taxes.

Social security tax

Provides benefits for retired workers and their dependents and also for the disabled and their dependents. Likewise known together the "Federal Insurance contributions Act" (FICA) tax.

Opening the Lesson

Hand out fact Sheet-Payroll Taxes and Federal income Tax Withholding. Usage the complying with questions to prompt students to share what castle know about withholding:

Can you describe why a worker earns $100 but receives a paycheck for much less than $100? (The $100 is gun pay, and also the lot of the examine is network pay.)What wake up to the quantity earned however not got by the employee? (Some of the difference is composed of payroll taxes and also income taxes withholding. The employer sends out these taxes come the commonwealth government.)How space payroll taxes used? (Social protection taxes are provided to provide for retirement workers, disable workers, and also dependents of both. Workers, retired workers, and also the couple of both room eligible to obtain Medicare services upon reaching age 65.)How are federal income taxes used? (Federal earnings taxes are supplied to pay for nationwide defense; veterans and foreign; society programs; physical, human, and also community development; legislation enforcement; and also interest top top the nationwide debt.)

Note: express students who might want come work independently on this module to college student Lesson-Payroll Taxes and Federal earnings Tax Withholding.

Developing the Lesson

Direct college student to taxes Tutorial-Payroll Taxes and Federal earnings Tax Withholding. Describe that employers usage the Social protection tax rate (6.2 percent), the Medicare tax rate (1.45 percent), and the information on form W-4 come compute the amount to withhold indigenous employee pay. Emphasize that employers carry out not store the amounts withheld indigenous employee pay; instead, the employers send the withholding to the commonwealth government.

Online Activity

Direct students come Simulation 1-Completing type W-4. Define to students the they will use the information listed in the exercise to complete form W-4 for Lawrence Red Owl, a retail keep manager.

Concluding the Lesson

After students have completed tax Tutorial-Payroll Taxes and also Federal revenue Tax Withholding and Simulation 1-Completing kind W-4, questioning them whether they have actually questions about payroll taxes and also income tax withholding. To ensure that they know the difference between gross pay and also net pay, questioning the complying with questions:

Explain how employees pay social Security and Medicare taxes. (The employee withholds payroll taxes from employee pay.)Explain just how the employer knows just how much income tax to withhold. (The employee refers to type W-4 to calculate the earnings tax withholding.)


As a final review, summarize the significant lesson points. Repeat students the employers withhold payroll taxes indigenous employee pay. Employers use form W-4 to recognize the lot of revenue tax come withhold. Employers send the withheld taxes to the commonwealth government. As soon as the students are comfortable v the material, have actually them finish Assessment-Payroll Taxes and also Federal earnings Tax Withholding.

See more: Which Of These Is A Benefit Of Consumer Protection Regulations

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