Module 9: Total 100 points
· Knowing Your Paycheck 20 points
· Capital Gains Tax 20 Points
· Property Tax 20 Points
· Tax Tip 20 points
Knowing Your Paycheck
“Money beliefs play a major role in guiding your current and future financial behaviors. These beliefs help explain key differences between savers, spenders, and people who try to avoid money matters completely.”
Below is a sample paycheck stub. Look at the paycheck and locate the deductions that are coming out of your paycheck then use this information to fill out the table below. Be sure to include what organization the deduction is being paid to. In the “Explanation of Deduction” section, write what that organization is using the money for. BE SPECIFIC.
|McMenamins, 2001 NW Monroe Avenue EARNINGS STATEMENT|
|EMPLOYEE NAME SOCIAL SEC. ID EMPLOYEE ID CHECK No. PAY PERIOD PAY DATE|
|Sample Sampleton XXX-XX-1234 5555-5555 379824 02/17/15-03/02/15 03/05/15|
|INCOME RATE HOURS CURRENT TOTAL DEDCUTIONS CURRENT TOTAL YEAR-TO-DATE|
|GROSS WAGES 1,307.69||FICA MED TAX 18.96 94.81
FICA SS TAX 81.08 405.38
FED TAX 165.14 825.72
OR ST TAX 101.31 506.54
|YTD GROSS YTD DEDUCTIONS YTD NET PAY
6,538.46 1,832.45 4,706.01
|TOTAL DEDUCTIONS NET PAY
1,307.69 366.49 941.20
|Required Deductions||Explanation of Deduction (where is the money going?)|
|Questions||Answers (fill in this column)|
|How much money did you earn on this paycheck?|
|What would be an example of an optional deduction (list and describe)|
|Can you get back money that was deducted from your paycheck? How?|
Is there anything that surprised you about your paycheck?
Capital Gains Tax
Another function of the U.S. tax code is the tax on capital gains. A capital gain occurs when you sell something, such as your home or another investment, for a price higher than what you paid for it (a capital loss occurs when the price is lower than what you had originally paid). Read the article on Capital Gains Tax to learn more about the function of this tax and how it could affect you.
Suppose you buy 100 shares of XYZ Corp. for a price of $20.00 on January 1st. You then decide to sell your shares in the future for the market price of $19.50. What are the tax implications of this trade?
Managing your taxes requires a lot of consideration, and one thing to consider is property tax. Read the following article on Property Taxes, and answer the following question:
What kind of considerations related to property taxes are necessary to consider when buying a home?
Search for three areas you would like to live in and gather data for three homes regarding the location, size, and taxes for each.
|Home||Location||Size in sq ft.||Cost of Taxes|
Filling Your Taxes
Filing taxes is one of the most stressful task people try to avoid each year. There are many words and terminologies that are not very intuitive and you can get into trouble with the IRS if you make a mistake. However, learning more about filing your taxes will help you overcome any fears and misconceptions, which will lead to better financial decisions for your future.
Go online to E-File’s Tax Calculator. This calculator will walk you through preparing your taxes so that you understand how your actual Tax Return is determined.
To begin estimating your taxes with the calculator, select your filing status. Then follow the directions on the screen. Throughout the process, the calculator provides additional information for you in case you need help understanding any components. We highly recommend you take advantage of this rather than blowing right by without truly understanding the numbers you input.
At the end of the process, the calculator requests you provide your email address to receive your report. You do not need to do this – simply X out of the box and look at the final screen, which tells you a quick overview of what you entered and your estimated tax refund. Screen shot and submit this page.
To receive credit for this portion of the assignment, insert an image of the quick overview below.
Insert Screen Shots below –
Answer the following:
On a scale of 1-10, what is your comfort level in filing your own taxes? Explain why. (50-100 words)
What are your biggest concerns in filing your own taxes or what questions do you still have? (50-100 words)
You’ve now researched several Tracking Tools and have chosen one that you believe will best meet your needs. In this assignment, you will be working on setting up your tracking tool.
Read the article on Tax Tips for College Students to Avoid Mistakes. This article will introduce you to some successful tips and tax tricks that help you ensure you don’t make crucial mistakes.
Rank the three biggest mistakes college students make in order of most helpful/relevant to you to least helpful/relevant to you. Explain why. (25-50 words)
Complete the following:
Talk to your parents or guardians about your dependency status. Do they claim you as a dependent on their taxes?
What do you believe are the benefits of them claiming you? What are the potential drawbacks? Think both in terms of the benefits/drawbacks to them as well as the benefits/drawbacks to you. (25-50 words)
Education Deductions/Credits (Tax Benefits for Education: Information Center-2.pdf ):
Are you eligible for education deductions and/or credits? If so, which are you eligible for and for how much (your best estimates)? Would you claim them or would your parent(s)?
The article indicates that you can’t claim all of the deductions/credits – what is the relative benefit for your situation of taking one over the other? (25-50 words)
Which one will you (or your parent) likely take when filing your taxes this next year?
Dual State Income
Are you in a situation where you have income from more than one state? If so, what two states? What are the laws relating to paying taxes on income in each state for your situation?
Although not listed in the article, in addition to missing Education Deductions/Credits, many Americans also miss other credits such as the Child and Dependent Care Credit of the Earned Income Tax Credit (EITC). Look up each of these and answer the following:
What is the Child and Dependent Care Credit (Links to an external site.)? Provide a detailed answer. (25-50 words)
Are you eligible for it? If so, how much could you potentially qualify for?
What is the Earned Income Tax Credit (Links to an external site.)? Provide a detailed answer. (25-50 words)
Are you eligible for it? If not, why? If you are, how much could you potentially receive?