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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:

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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