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The Hows of Taxes

Module 1: Payroll Taxes and Federal Income Tax Withholding

 

Workers
Payroll taxes include the Social Security tax and the Medicare tax. Social Security taxes provide benefits for retired workers, the disabled, and the dependents of both. The Medicare tax is 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. Federal income taxes are used to provide for national programs such as national defense; veterans and foreign affairs; social programs; physical, human, and community development; law enforcement; and interest on the national debt. Use these resources to learn more about withholding.

materials:

Tax Tutorial
Tax Tutorial: Payroll Taxes and Federal Income Tax WithholdingLearn how payroll taxes are collected and used as well as how federal income taxes are used. Learn how employers determine how much federal income tax to withhold from employee pay.
Simulation
Simulation: Completing Form W-4Help Lawrence Red Owl, a retail store manager, complete Form W-4 and claim federal income tax withholding allowances.
Assessment
Assessment: Payroll Taxes and Federal Income Tax WithholdingReview your understanding of payroll taxes and federal income tax withholding.
Fact Sheet
Fact Sheet: Payroll Taxes and Federal Income Tax WithholdingPrint this fact sheet on payroll taxes and federal income tax withholding.
Fact Sheet
Witholding EstimatorDetermine how to have the right amount of tax withheld from your paychecks.
skill check:
Check your understanding of payroll taxes and income tax withholding. Indicate whether each of the statements below is true or false by clicking on the correct answer. To assess your answers, click the Check My Answers button at the bottom of the page.
  1. Employees decide when to pay their payroll taxes.
  • A.
  • B.
  1. Federal income taxes are used to pay the interest on the national debt.
  • A.
  • B.
  1. The Medicare tax rate is 1.45% of gross pay.
  • A.
  • B.
  1. Employees use Form W-4 to prove that they are eligible to work in the United States.
  • A.
  • B.


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