Vocab
This is the total amount of money you earn before taxes or deductions are taken out.
What is gross pay/income?
tax that only applies to earned income
What is payroll tax
This tax is added when you buy most goods and services.
What is sales/consumption tax
This form tells your employer how much federal income tax to withhold from your paycheck.
What is a W-4 form?
Deductions that everyone can take before calculating Adjusted Gross Income are called this.
What are above-the-line deductions?
two types of income that pay income tax
What is earned and unearned?
This tax funds retirement and disability benefits for workers and their families.
what is social security tax?
This government level collects sales tax to fund public programs.
What is state and/or local government?
This form is received in January/February and shows your total earnings and taxes withheld for the year.
What is a W-2 form?
If you don’t itemize deductions, you can take this flat-dollar amount to reduce taxable income.
What is the standard deduction?
These reduce taxable income, not the tax owed.
What is a deduction?
These two groups split the cost of payroll taxes that fund Social Security and Medicare.
Who are employers and employees?
This type of tax system charges the same percentage to everyone, regardless of income.
What is a proportional tax?
This federal form, completed in April, reports your income and helps you calculate how much tax you owe or get refunded.
What is Form 1040?
This type of tax credit can reduce your tax bill below $0, resulting in a refund.
What is a refundable tax credit?
This amount of income is left after taxes and deductions are taken from your paycheck.
What is net income?
This federal tax, named for the Federal Insurance Contributions Act, is automatically withheld from paychecks to fund retirement and health benefits for older Americans.
What is FICA?
This tax is based on the money you earn from working or investments and helps fund government programs.
What is Income tax
This form is used to verify that an employee is eligible to work in the United States.
What is Form I-9?
This type of deduction allows you to list specific expenses like mortgage interest or charitable donations.
What are itemized deductions?
Money you earn from investments, interest, or dividends is called this type of income.
What is unearned income?
This document shows your income, deductions, and taxes for a single pay period.
What is a paystub?
This kind of tax takes a larger percentage from high-income earners than from low-income earners.
What is a progressive tax?
This form is sent if you earned income as an independent contractor or through investments.
What is Form 1099?
This is the income number used to determine eligibility for tax credits and below-the-line deductions.
What is Adjusted Gross Income (AGI)?