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Chapter 6 – Paying TaxesKey Terms and ConceptsWhat is the purpose of the IRS?What is the difference between Social Security and Medicare?What Do You Know?What is the difference between gross pay and net pay?Why is it important to know the difference?Who pays taxes?What kind of tax are you paying when you pay $1.05 for a $1 item at a convenience store?What agency administers the federal tax laws?What is the purpose of a tax return?What are Your Finance Math Skills?Josh’s gross pay was $320 this week. How much in FICA will be withheld from his check assuming the Social Security and Medicare withholdings for employees is currently 7.65%? (hint: take his gross pay and multiply that by withholdings. Convert 7.65% (a percentage) to a decimal by moving the decimal two places to the left)Amber’s starting salary for her new job will be $35,500 a year. How much will she pay to the Social Security system for her first year assuming total FICA withholdings of 7.65%? (hint: same as #9)What is Corbin’s gross income for 2012 if his salary is $21,050 and he receives $420 in interest for the year? (hint: add all sources of income together)Washburn’s employer withheld $4,245 from his paycheck for federal taxes. After calculating his tax liability, he discovers he will only have to pay $3,211 this year. Will he get a tax refund and, if so, how much? (hint: find the difference between what his employer withheld and his tax liability) ................
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