Tax Vocabulary and Definitions

A comprehensive vocabulary flashcard set covering key tax terms, government forms, and definitions from sections 4.2 and 4.4.

Federal Unemployment Tax Act (FUTA)

A federal program that provides temporary financial assistance to unemployed workers who lose their jobs through no fault of their own.

Income Tax

A tax imposed on the income generated by an individual or business. Income tax is further divided into federal, state, and local income tax.

Medicare Tax

A tax that funds health insurance for citizens 65 years of age and older, and for younger people receiving disability benefits through Social Security.

Progressive Tax System

A tax system where the tax rate increases as the taxpayer's income increases.

Property Tax

A tax imposed on real estate or other forms of property, calculated based on the value of the property.

Sales Tax

A consumption tax paid by the end consumer of goods and services, and collected and remitted by the seller to the appropriate government agency.

Social Security Tax

A tax that funds financial assistance for retirement, disability, and survivors.

State Unemployment Tax Act (SUTA)

A state program that provides temporary financial assistance to unemployed workers who lose their jobs through no fault of their own.

Tax Liability

The amount of money that is owed by a person or organization to a taxing authority, like the federal, state, and local governments.

Taxes

Mandatory payments made by individuals and businesses to governments.

Adjusted Gross Income (AGI)

A taxpayer's total income for the year minus specific eligible deductions.

Dependent

A person who relies on the taxpayer for financial support and for whom the taxpayer can claim a dependency exemption on their tax return.

Filing Status

A category that defines a taxpayer's marital and family situation, affecting tax rates, standard deductions, and eligibility for certain tax benefits.

Form 1040

The standard U.S. Individual Income Tax Return form used by individuals to file their annual income tax returns with the Internal Revenue Service (IRS).

Form 1099-DIV

A tax form used to report dividends and other distributions from investments.

Form 1099-INT

A tax form used to report interest income received from various sources, such as banks.

Form 1099-NEC

A tax form used to report payments made to non-employees for services performed for a business.

Form 1099-R

A tax form used to report distributions from pensions, IRAs, or other retirement accounts.

Form W-2

A tax form an employer prepares to report an employee's annual compensation and tax-related withholding amounts, also called a Wage and Tax Statement.

Income

Any money an individual or business earns or receives as the result of economic activity.

Itemized Deductions

Specific expenses that taxpayers can claim to reduce their taxable income.

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Standard Deduction

A fixed dollar amount that reduces a taxpayer's taxable income.

Tax Credit

A direct reduction in the amount of taxes owed by a taxpayer.

Tax Day

The official deadline for individuals and businesses to file their federal tax returns for the previous year.

Tax Deduction

An expense that a taxpayer is allowed to subtract from their total income to reduce the amount of income that is subject to taxation.

Tax Refund

The amount of money returned to a taxpayer by the government when the taxpayer has paid more in annual taxes than they owed.

Tax Return

A form or set of forms filed with the government to report (personal or business) income, the taxes already paid during the prior year, and the taxes still owed.

Taxable Income

The portion of income that is subject to income tax.

Withholding

The process by which an employer deducts a portion of an employee's wages or salary for taxes, retirement plans, health insurance premiums, and other employee benefits, before the remainder is paid to the employee.