taxes

audit

IRS inspecting a persons tax return

dependent

Someone you financially support who can be "claimed" on a tax return to reduce your taxes

discretionary spending

fed gov spending determined by legislative action and approved through votes by elected officials

dividend

company money/profit that is paid out to its shareholders

exemption

amount of money, per dependent, you can subtract from your taxable income

FICA

law that requires tax to be taken out of paychecks to fund social security and medicare

filing status

defines the type of tax return someone will use to determine their tax rates and benefits, based on marital status and family composition

income tax

direct deductions from paycheck to fed/state gov

mandatory spending

fed gov spending required by previously existing laws, like Social Security and Medicare/Medicaid

medicaid

government insurance program that provides healthcare assistance to low income Americans

medicare

government insurance program that provides healthcare assistance to elderly and disabled people

paycheck stub

attached to every paycheck and shows earnings and the amount withheld for taxes, health insurance and retirement fund

progressive tax

Higher income higher tax rate, lower income lower tax rate.

social security

federal program that provides monthly benefits to retirees, military families,families of deceased workers, and disabled people

standard deduction

A set dollar amount that reduces your taxable income

taxable income

gross pay - deductions = taxable income (determines income tax owed)

tax refund

government giving back money to someone who paid more taxes than what was due

withholdings

portion of money taken out of paycheck that goes directly to fed, state and, local taxes