Intro
The difference between BASIC needs & CONSUMER needs?
BASIC- things you need to survive.
CONSUMER- needs for individual consumers in individual situations.
The difference between Gross and Net pay?
Gross income- the amount of earnings before payroll deductions
Net income- take home pay is your gross income minus payroll deductions
Definition of benefits?
The different retirement plans that your employer offers.
What is the IRS?
revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes
What is a W4 form?
determines the percentage of gross pay that will be withheld for taxes. Use this form to claim dependents.
What are the 4 SMART goals?
Specific, Measurable, Realistic, Time-bound
Definition of minimum wage? What is NJ min. wage?
the lowest pay rate allowed by law for each hour worked.
Federal is $7.25 per hour
NJ is around $14 per hour
What is 401K
Retirement savings plan sponsored by an employer
What is an excise tax?
taxes that are imposed on various goods, services and activities. (on things such as alcohol and tobacco)
What is a W2 form?
filled out by your employer. Shows your taxable income
What are the different types of goals lengths?
Short-term: One year or less
Medium-term: Once to 5 years
Long-term: 5 years or more
What is the Over-time pay rate?
1.5
What is Roth IRA
(individual retirement plan)- person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59 ½ are tax free.
*NOT through employer
Penalties of Tax evasion?
IRS audit, heavy penalties
What is I9 form?
proves you are eligible to work in the US
Who is a Financial Planner?
A person employed to manage the personal finance of clients
(evaluates spending habits, helps to achieve goals, and increase wealth)
Examples of Mandatory and Voluntary Deductions?
Mandatory: Federal income taxes, State income taxes, Social security taxes, Medicare taxes, Local income taxes
Voluntary: Insurance, Savings /retirement plan contributions, Donations
What's a pension?
Employer funded plan. The employee receives regular payments in retirement
Tax Avoidance vs. Tax Evasion?
avoidance- reducing your taxes by claiming legitimate adjustments, tax deductions, and credits
evasion- failing to declare all income or falsifying deductions, adjustments or credits
What is a 1040 form?
form that individual taxpayers use to file their annual income tax returns
Why is financial planning important?
to allow people to better arrange to spend, save, and invest money to:
Live comfortably
Have financial security
Achieve goals
What are the different types of pay?
Wages, over-time, salary, tips, commission, paycheck, direct deposit, pay card,
Taxable vs. Not taxable
Taxable:
All income (salary, wage, tip, commision)
Interest ons savings accounts, bonds, etc
Dividends and capital gains
Gambling winning
Not taxable
Money put into Retirement plan
Gifts up to 14k per year
Why do we pay taxes?
taxes provide revenue for federal, local, and state governments to fund essential services--defense, highways, police, a justice system--that benefit all citizens, who could not provide such services very effectively for themselves.
What is a Dependent?
a person who relies on the taxpayer for financial support (kids)