Federal taxes

What is FICA?

Federal insurance contributions act requires employers and employees to contribute to social security and medicare

What is social security?

Federal program for disability and retirement 6.2%

What is medicare?

Federal health care available to all senior citizens 1.45%

What does gross mean?

Everything you earn

What does net mean?

After taxes

What are the payroll taxes?

Social security and medicare

What is individual income tax?

A tax on earnings used to support the operation of the government

What is w-4?

Tells employer how much federal income tax to take out of your paycheck

What is w-2?

Employer sends every year to tell you how much you earned and how much was tax was taken out of your paycheck

What is 1040?

A tax form for individuals to file their federal income tax return (how much money you owe or the government owes)

What is indexing?

Two things tied together

What is taxable income?

The dollar amount that actually gets taxed after deductions

What are tax deductions?

A portion of your income that is tax free

What are tax loopholes?

A mistake made that can be taken advantage of

What is a lump sum tax?

Everyone pays the same dollar amount

What is a flat tax?

Everyone pays the same % of tax