Tax+Return



The mistake that many people make is that they base their spending on their //**gross**// income, not their //**net**// income. Since taxes are an expense that you pay all year (remember withholding?), we will need to calculate that cost and then pro rate it for each month.

For purposes of this assignment, we will not calculate all the taxes that you might pay. You will need to calculate the following taxes for the year and then pro rate that expense for the month.

Taxes you will pay:  //**Your tasks:**// 1) Copy the table at the bottom of this page to your section of the wiki and complete the table for your situation using your knowledge about taxes. 2) After completing the table, enter the final monthly tax expense on your Google Budget Spreadsheet.
 *  Social Security
 *  Medicare
 *  Federal income tax
 *  Pennsylvania income tax

Note about the federal income tax: When computing the federal income tax, you may complete the 1040EZ form //**or**// use the simplified calculation that we used in class. As a reminder, your taxable income is calculated by taking your gross income minus $9350. You will need to consult the tax tables in the instruction packet for the 1040EZ to calculate the final annual tax. The tax tables start on page 27 of the instruction packet.

Here is the instruction packet: Here is the 1040EZ form (optional): 
 * ~ Name of Tax ||~  ||~ Calculation of tax for the year (provide a complete formula for each tax's calculation) ||~   ||~ **Dollar amount of tax** ||~   ||~   ||~   ||
 * < **Social Security** ||  ||<   ||   ||   ||<   ||
 * < **Medicare** ||<  ||<   ||   ||   ||
 * < **Federal income tax** ||<  ||<   ||   ||   ||
 * < **PA income tax** ||<  ||<   ||   ||   ||
 * <  ||<   ||> **Total for //year//:** ||   ||   ||
 * ||  || ** Total for //each month//: ** ||   ||   ||