Chapter 2

Income, Benefits, and Taxes

Slide 2

What Is Unearned Income?

2-2 Unearned Income and Benefits

Earned Income Unearned Income Variable Income

Salaries and wages Interest Business profits

Tips Dividends Rents

Commissions Capital gains Royalties

Bonuses Gambling winnings Farm Income

Professional fees Alimony

Social security benefits

Pensions

Annuities

Unemployment compensation

Slide 3

What Type of Taxes Do You Pay?

2-2 Unearned Income and Benefits

• Taxes are based on consumption, income, and wealth.

• Direct taxes are paid directly to the government.o Examples: income and property taxes

• Indirect taxes are charged on goods or services bought by the consumer.o Examples: use, excise, and sales taxes

Slide 4

How Do You Benefit from Paying Taxes?• Direct benefits

o Examples: social security, police, national parks

2-2 Unearned Income and Benefits

• Indirect benefitso Examples: public

education for citizens, free vaccines

Slide 5

Building Communications Skills

2-2 Unearned Income and Benefits

Critical Listening• Evaluate the

information you hear.• Consider only

important or relevant information.

• Make good decisions based on what is accurate and useful.

Slide 6

Focus On . . .

Social Security Benefits

2-2 Unearned Income and Benefits

• Workers pay into the social security fund through payroll deductions.

• A social security number is assigned to each person.

• Employers match the payments.• Upon retirement, workers receive a monthly

benefit check.