Vocabulary Set 1
income tax return form; most common tax return form
1040A Tax Form
generally a child, in-laws or other blood relatives who receive at least one half of their financial support from the person claiming them on taxes
Dependent
investment account that earns interest; commonly used to save for retirement; money is taxed when withdrawn
Individual Retirement Accounts (IRA)
investment vehicle which pays back principal plus installments of interest; works by loaning your money to a company which invests in a collection of short term loans; pays back interest your money has earned in set payments, for example every month
Money Market Funds
small parts of company ownership
Shares
investment account which earns interest; commonly used to save for retirement; allow matching contributions from employers; money is taxed when withdrawn
401(k)
form taxpayers send the IRS on tax day, shows the IRS an estimate of what you intend to pay
Estimated Tax Payments (1040-ES)
recurring amounts at a specified time, such as annually
Installments
amount invested
principle
received by every taxpayer; an amount set by the IRS on which no taxes are paid (different in every state)
Standard Tax Deductions
bank account which pays interest on funds deposited in the account
Bank Savings Accounts
category which tax holders are placed in to determine the type of tax return a taxpayer will file
Filing Status
fee paid to use money; usually expressed as a percentage; can be thought of as the price “paid” to rent money
Interest
amount earned by an investment; usually expressed as a percentage; for example if you earned a return of $1,000 on your $1,000 initial investment, your return was 100 percent
Return
investments where you own a company; offer returns when the business grows and makes money; may or may not make money depending on stock performance
Stocks
investments which take an investor’s money and use it; later the investor is repaid the money in fixed increments, plus interest
Bonds
bonds issued by the government; tax exempt; obtained by loaning money to the government, which the government then uses to fund itself and pay off debts; pays back your money after a fixed amount of time, plus extra payments generated by interest
Government Bonds
specific expenses a person deducts from their gross income
Itemized Tax Deductions
chance of fluctuation in a return; in general, the higher the risk the higher the interest rate of return
Risk
groups individuals are placed in to pay taxes; based on amount of income earned
Tax Bracket
savings investment where the individual invests a set amount of money; money invested is paid back in set, plus interest; usually issued by banks
Certificates of Deposit (CD)
individual who is the primary income provider
Head of Household
to use government authority to impose or collect a tax
Levy
investment account which earns interest; commonly used to save for retirement; money is taxed when withdrawn
Roth Individual Retirement Accounts (Roth IRA)
reduction in what an individual owes in taxes because tax credits are subtracted from the total amount of taxable income; lower the total amount of taxes owed
Tax Credits