Income Taxes and Life Skills Math

 

money symbolSchool to Work Unit 8

This is a functional academics skills unit.  The overall objective is to be able to understand the information in on a paycheck, to be able to fill out a W-4 "Employee Withholding Allowance Certificate", transfer information from the W-2 "Wage and Tax Statement" to a 1040EZ tax return form and calculate a return based on simulated information.

Introduce the 4 forms involved in employment and taxes: W-4, paycheck, W-2, and Income Tax Return-1040EZ. Show examples of the forms and overview of what they are used for, and when you need to deal with them.

 Fill in W-4 "Employee Withholding Allowance Certificate" as a group with the vocabulary specific to the form on display. The students add up their allowances, fill in the address section, sign and date it. If they don't know their social security number this is the time to stress that they find out what it is . Also stress they must have the SS. number to get a job and the importance of never giving out the number over the telephone or to strangers. (W-2 and W-4 get confusing so I use the memory aid of the fact that the W-4 title has 4 words in it and it tells you that it's about withholding money)

 

 

Introduce Paychecks: calculate gross pay based on 40 hour week, minimum wage, subtract deductions - Approximately based on minimun wage -FICA (.062 or 6%), Medicare (.0145 or 1 3/4%), Federal (12%), find the net pay. Identify these factors on mock paychecks. Give students examples using different pay rates. The goal is to be able to do the basic addition, subtraction, and multiplication on calculating wages and to be aware of the different deductions, know how to read a paycheck and check for accuracy. Classroom teachers can extend this lesson into fractions and decimal calculations involving the deductions.
Pass out sample pay checks that have parts missing and have students multiply the rate times the number of hours worked, add up the deductions, subtract them from the gross pay to get the net pay. Next fill in missing parts of the check (practice writing number words). The goal is identifying elements of the pay check stub and proper check writing.
 
Introduce W-2 form "Wage and Tax Statement" and fill out Income Tax Return 1040EZ . As a memory aid here W-2 has two basic words Wage and Tax and that is what it is all about. How much wage (pay) and tax did they pay in the past year. Identify the parts of the W-2 form, the information that is given and use this information to fill out the 1040EZ. I downloaded and printed the forms off of the IRS web site. These copies were much clearer and easier to read than the forms you get in the mail or at the library. The information on the W-2 is based on a minimum wage job, 40 hour weeks, 52 weeks a year and basic, FICA, Medicare and Federal taxes withheld. Upper level students can be given more complex forms with taxable income, unemployment compensation etc. Stress to the students that they can get help doing this form from family members, friends, employer, IRS, etc. These forms are put in their notebooks for reference.
Outline of information to teach and forms to fill out dealing with the Federal Income Tax Process
1. When you are hired to work you must fill out a W-4 form (Employee's Withholding Allowance Certificate)
    a. You must claim __# of dependents.
    b. Your employer now knows how much money to withhold from you paycheck and send to the federal government.
 2. Paycheck- wages received from employer each pay period (weekly, bi-weekly, or monthly)
    a. Deductions/withholdings are taken from you pay check each pay period for:
        1. Federal Income Tax
        2. FICA (Social Security)
        3. Others... health insurance
3. W-2 statement (Wage and Tax Statement)
    a. You receive the W-2 form in January from your employer.
    b. The W-2 form states your year in wages (gross pay)
    c. It states your year in withholding (ex. federal income tax, FICA..._
    d. You use this information to fill out your Income Tax Return.
4. Income Tax Return (1040EZ, 1040, 1040A)
    a. It can be obtained through the mail, at the post office, library, the IRS (Internal Revenue Service), http://www.irs.gov
    b. You fill it out using the information from the W-2 ( and sometimes other sources)
    c. You sign it.
    d. You file it, (filled out, signed, and in the mail) with the W-2, and a check if necessary on or before April 15th.
Metlife Life Advice
Post Test The following questions can be set up as multiple choice, fill-ins or written answer format.
1. When do you fill out a W-4 "Employee Withholding Allowance Certificate"?
2. When should you expect to get your W-2 form "Wage and Tax Statement'?
3. What information is given to you on the W-2 form?
4. What do you do with the W-2 form that your employer sends you?
5. If you didn't get a 1040 Income Tax form in the mail where could you go to get one?
6. If you need help filling out the Income Tax Return, who could you ask for help?
7. What is the deadline for filing (filling out, signing, and mailing) your Income Tax Return?
8. Name at least 3 services or programs that are supported through out tax money.

Useful Web Sitesother life skills math resources

Opening of a Checking Account

Doing Your Taxes from Metlife