Taxes
1040
a form used by U.S. taxpayers to file an annual income tax return
interest income
the money earned from lending money to others or from savings accounts, bonds, or certificates of deposit (CDs)
standard deduction
a fixed amount that reduces taxable income that tax filers can claim without providing specific details
1099
a form that reports gross income from self-employment or freelance work; does not account for tax withholdings
itemized deductions
various expenses that lower taxable income
tax credit
dollar-for-dollar reductions in the amount of tax owed. It's a type of incentive that reduces tax liability and is usually offered to promote certain economic or social behaviors
adjusted gross income
a taxpayer's total income from all sources minus specific deductions known as "adjustments to income."
payroll taxes
deducted from employees' salaries and are used to fund programs such as Social Security. Medicare, and unemployment insurance
tax deduction
an expense that lowers taxable income, which means paying taxes on a smaller portion of earnings. 14. Unearned Income: Refers to money obtained from sources other than work, including interest, dividends, rental income, and capital gains
capital gains
profits made from selling investments such as stocks, bonds, or real estate
property taxes
based on the value of real estate properties and are used to fund local services like schools, police and fire departments, road maintenance, and public parks
w-4
form is filled by an employee to indicate his or her tax situation to the employer
earned income
refers to money earned through active work or services provided, such as wages, salaries, tips, or self-employment income
sales taxes
imposed on the sale of goods and services and vary from state to state and is used to fund state-level services and programs, including education, transportation infrastructure, healthcare, and public safety