….because kids need to understand taxes too!
The term ‘tax’ is defined as a fee charged by the government on an income, product, or service.Every government must pay expenses, such as the salary of employees and social services. To pay back the government on the amount that is put towards the economy, taxes are collected. Between sixty and eighty percent of all revenue the government collects comes in the form of taxes. These include various types of taxes, such as income tax, sales tax, and property tax. Taxes are needed to build roads, buildings, and homes, as well as provide a formal education and community services, such as police and fire departments. In the United States, the deadline for filing an income tax return is April 15. Taxes are paid throughout the year for those individuals who work for an employer and by estimated payments if self-employed. Other forms of taxes, such as sales tax, are paid at the time a product or service is received.
Great Starting Points for Teachers:
- Money Instructor – Paying Taxes Lessons
- Classroom Tools: Tax Returns Made Easy
- Tic Tac Taxes
- Taxes Lesson Plans & Activities for Teachers
- Lesson Corner: Paying Taxes
Sales tax is a type of consumption tax charged when a product or service is purchased. The amount of the tax is calculated by combining a taxable price of sale by a percentage rate, according to the state in which the product or service was purchased. There is a list of exemptions that do not require sales tax according to sales tax laws, such as food. Some laws may require the tax to be included in the price or added at the point of sale. Sales tax is commonly seen as a form of good tax, as it promotes economic growth, investment, and savings.
Excellent Lessons on Sales Tax:
- Pro Teacher – Sales Tax
- What’s for Dinner? – Determining Sales Tax
- Lesson Plan – Finding Sales Tax
- Sales Tax Lesson Plan
- Lesson Plan – Preparing for Tax Day
Income tax is a type of tax levied on the income of corporations, businesses or individuals. Known as a progressive tax, the individual has the obligation to report all income earned during the fiscal year. The general income tax structure allows individuals to earn a specific amount of non-taxable income that is calculated by a standard deduction amount found on federal and state income tax forms. When working for an employer, the payroll department must deduct a set percentage from each paycheck for tax purposes.
Excellent Lessons on Income Tax:
- Tax Returns Made EZ
- Math Skills for Everyday: Filling Out Income Tax Forms
- Income Taxes: Types of Taxable Income
- Income Taxes: Who Pays and How Much?
- April 15 Is Tax Day
Paying vs. Not
Calculating tax will depend on which type of tax you are required to pay. When paying sales tax on a product or service, consumers must first determine the sales tax for their location from the Federal Tax Administration. Tax on an item or service can be determined by multiplying the cost of the product or service by the sales tax percentage. When calculating income and property taxes in the United States, the income of the individual and whether your filing as married, single, or head of household comes into play and will make a difference in the amount of taxes you owe.
Excellent Lessons on Taxes in General:
- Kids’ Money for Teachers
- Funding Factory Lesson Plans
- Tax Incentives
- Paying for Government Services
- The Role of Government
Not paying your taxes can lead to a road of financial hardships, penalties, and sometimes an audit. Statutes of limitations are allowed by the Tax Code in order for the IRS to go after non-filers. Criminal charges may be brought against the individual within a six year period of when the tax return was due. Civil penalties may be imposed with no deadlines but assessed with penalties and interest. Generally, the IRS policy states that they do not go after non-filers six years after the filing deadline. Refusal to file a tax return is known as a criminal offense and can lead to one year in prison for each year a tax return wasn’t file, as well as a $25,000 fine for each year. This tax debt is also combined with penalties and interest.