Earned Income
What is the difference between a wage and a salary?
A wage is hourly pay eligible for overtime; a salary is a fixed annual or monthly amount.
What are cafeteria-style benefits?
Plans allowing employees to select benefits based on their needs.
What is a progressive tax? Give an example.
A tax rate that increases with income; example: income tax.
What is unearned income? Provide an example.
Income not from a job; example: dividends, birthday/Christmas money
Give an example of a direct tax.
Answers may vary.
Income tax.
What is overtime pay, and how is it calculated?
Extra pay for hours beyond 40 per week, calculated at 1.5 times the regular rate.
Name two common employee benefits.
Answers may vary:
Health insurance and paid vacation.
What is the purpose of a use tax?
To prevent sales tax avoidance for items used in a different state.
What are capital gains, and how are they taxed?
Profits from selling property taxed at a lower rate.
What are public goods? List two examples.
Government-funded services; examples: roads and national defense.
Name one example of earned income other than wages or salaries.
Tips or commissions
Why are benefits valuable to employees beyond salary?
They increase job value and may not be taxed.
How does property tax differ from excise tax?
Property tax is based on assessed value; excise tax is for specific goods or services.
Name one government transfer payment and its purpose.
Social Security benefits; provides income in retirement.
Explain how Social Security provides direct benefits.
Workers contribute via taxes and receive retirement payments.
What income is subject to Social Security and Medicare taxes?
All types of earned income.
What is the difference between an HSA and an FSA?
HSA funds carry over; FSA funds do not.
What is a luxury tax?
A tax on non-essential goods like yachts.
What is interest income?
Money earned from savings or investments.
What is a regressive tax? Give an example.
Taxes that disproportionately affect low-income earners; example: sales tax.
What constitutes earned income?
Any income received from working.
What is "pay without work"? Give an example.
Paid time off; examples include vacations or sick leave.
What type of tax is Social Security?
A direct tax.
What is a dividend?
A portion of a corporation's profits distributed to stockholders.
What is the assessed value of a property?
The value used to determine property tax, typically a percentage of market value.