Vocabulary
The total amount you earn before any deductions are subtracted.
What is Gross Pay?
Is a salary or hourly wage considered earned or unearned income?
Earned income
What is the most common form used by employers to report your annual income?
Form W-2
Name 2 types of taxes imposed by governments
Income, Sales, Property, Tariff, Payroll
Name 2 common optional benefits or incentives employers may offer employees.
Medical insurance, paid vacation/holidays, sick leave, employee discounts, dental/vision coverage, bonuses
The amount taken our of your paycheck for taxes
What are deductions?
Name 2 sources of unearned income
Birthday money, interest on savings, unemployment, prize money, dividends, allowance
Which form is completed by employees so employers know how much tax to withhold from paychecks?
Form W-4
Name 2 examples of things that qualify for a tax credit.
Installing solar panels, adopting a child, purchasing an electric car
Which perk allows employees to buy company stock, often at a discounted rate?
Stock Options
What you get when all deductions are taken out of your gross pay
What is Net Pay?
Name 2 common forms of work earnings.
Salary, wages, overtime, tips
Which tax form is filed by individual taxpayers to report income and calculate federal tax liability or refunds?
Form 1040
Name 2 individuals who can be claimed as dependents on a tax return
Children, spouses, elderly parents, disabled relatives
What is it called when a company shares a portion of its profits directly with employees?
Profit Sharing
Benefits offered to employees over and above what they receive as a regular salary
What are employee benefits?
True or False: You must report all of your gross income on your tax return, even unearned income.
True
True or False: Health insurance, dental insurance, and union fees are required government tax deductions.
False - They are optional
What is the difference between a tax credit and a tax deduction?
A deduction reduces taxable income; a tax credit directly subtracts money from the total tax owed
Name 2 examples of voluntary deductions that might appear on a paycheck for employee benefits.
Health insurance, dental insurance, eye insurance, retirement, flexible spending account, union fees
The government agency responsible for collecting income taxes and enforcing tax laws
What is the IRS?
Name 3 factors that can affect employment and earning potential.
Education level, geographic location, supply and demand, industry type, skill level, work ethic
What do government programs under FICA provide?
Social Security and Medicare; insurance against loss of income and benefits
Name 3 options for tax filing status.
Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow(er)
Explain the difference between base pay and total compensation.
Base pay is the regular wage/salary earned, while total compensation includes base pay PLUS all employee benefits and incentives