taxes sg

progressive (federal income tax)

takes a higher percentage from the rich than the poor

regressive (sales tax, user fees, excise tax)

takes a larger percentage of income from low income earners

proportional (illinois state income tax)

everyone pays the same percentage of income, flat tax

federal insurance contributions act, social security and medicare

what does fica stand for? what government programs are assosiated with it?

federal income tax

what is the largest deduction from ones paycheck

property tax

sales tax

local

state income tax

sales tax

state

federal income tax

fica (social security and medicare)

federal

gift tax

a tax applied to gifts from one living person to another

estate tax

death tax; a tax imposed by the federal government on assets left by a deceased individual

portability

couples can combine their estate for up to 12.9 million dollars

seven ranging from 10% to 37%

how many brackets are in our income tax system

w-4 form

employee’s withholding allowance certificate

you use this form to figure out how many allowances you can claim which then tells your employer how much tax money to withhold from your paychecks

for you to fill out

personal information, filing status, dependents, adjustments, signature

what type of information do you need in order to fill out the w-4 form?

must be 18 years or under (or 24 if a full-time student)

must be related or lived with you as a household member

how does someone qualify as a dependent for tax purposes?

to prevent large tax bills or refunds later at the end of the year

consistent government revenue stream

reduces the likelihood of individuals being unable to pay their taxes

why do employers withhold taxes from every paycheck rather than all at once at the end of the year?

dependents/exemptions

amount of money made

deductions

what are three factors affecting the amount of income tax you owe (tax liability)?

responsible for 50% or more of house expenses, be single, and have at least one qualifying dependent

how does a person quality to be head of household for tax purposes

income

more than salary and wages

tips, interest, commission, bonuses, and any other money you earn

1099-int

a form you receive from the bank that tells you how much interest your account earned

interest is considered income, so you still need to claim it

1099-div

dividend statement: tells the irs how many dividends your account earned

stocks you own pay dividends

mutual fund you invest in made capitals gains and distribute to you

needs to be reported on your tax return

w-2 form

wage and tax statement, already filled out for you

includes

total amount you were paid in that year

federal, state, social security, and medicare taxes withheld

a form your employer sends you at the end of the year showing how much you earned and how much tax was taken out

pennsylvania, alaska, new jersey

what three states contribute to unemployment tax?

standard deductions

a set amount that taxpayers may deduct before determining taxes

itemized deductions

medical expenses and charitable donations

a list of specific items that can be deducted and provide examples

tax refund

the amount of money the irs sends back to you after assessing and revising your tax return (money was borrowed for free)

tax returns

a set of forms that taxpayers use to calculate their tax obligations

tax avoidance

reducing taxes by claiming legitimate adjustments, deductions, and credit —> legal way to avoid unnecessary taxes

tax evasion

failure to declare all income and/or falsifying adjustments and deductions

tax audit

a detailed examination of your tax returns by the irs

seven years

how long should you keep past tax returns to be prepared for a new one?

death

divorce

disability

retirement (not unemployment)

name at least 4 times in life when someone could collect social security benefits

april 15th, moved to the next business day

what is the date to file your income taxes (without penalty)? what happens if that date is on a weekend or holiday?

raise revenues

make the tax burden fairer

simplify the tax system

provide desired economic outcomes

what is the purpose of tax reforms

tax

a mandatory charge imposed upon a taxpayer to fund various public expenditures

u.s. tax code

a collection of tax laws enacted by federal, state, and local authorities

• each state as its own set of laws and regulations for taxes

• the tax code changes periodically as the need for revenue increases

• the government tries to get revenue needed at a tax percentage that voters will accept

tax reform

the process of changing the way taxes are collected or managed by government

taxation

what is the primary source of revenue for most levels of government?

about 57%

what percentage of tax dollars goes to the federal government?

mandatory expenses

commitments the government has made to spend

cannot be changed, even if there is not enough revenue

social security, medicare, and interest on the national debt

examples of mandatory expenses

discretionary expenses

expenses that can be adjusted according to needs and revenue.

armed forces (national defense)

environmental protection

education and training

science and technology

examples of discretionary expenses

deficit spending

when the government spends more money than it collects in a given year.

user fees

fees charged for specific services, such as roadway tolls and admissions to state parks, cost for license, and renewing license plates

excise tax

often included in the price of the product

tax on goods and services that are harmful to the society

alcohol, cigarettes/tobacco, firearms, air travel, gasoline, tanning

examples of excise tax

public education, highways, public welfare programs, hospitals, ambulances, public transportation, police and fire, libraries

property taxes are used to pay things like

40%

how much do federal, state, and local taxes make up of an average family income?

gross income

the total amount of money you earn before taxes or deductions

net income

the amount you take home after taxes and deductions — your “paycheck money.”

payroll tax

a tax that an employer withholds from an employer’s salary

social security

medicare

income taxes like state and federal

what three primary line items are deducted

state income tax

what is the second largest deduction from one's paycheck

no girl u dont!

if you pay into a seperate pension like teachers do you pay social security?

social security

a federal government program for providing income when earnings are stopped

medicare

pays for hospital and medical costs for those who qualify, age and disability based whereas medicaid is public assistance for all americans regardless of age

personal property tax

an additional tax on personal property such as for cards, boats, rvs, art, etc, and illinois does not have this girl

wealth taxes

taxes based on a person’s net worth

assets-liabilities = net worth

inheritance tax

a tax you pay when you recieve money or property from the estate of a deceased person, illinois does not have this either girl

yesssss

is gift tax progressive?

the giver DUH

who pays gift tax

dependent

a person who you financially support and cannot be claimed by anyone else

exemption

reduces your taxable income, reducing your taxes

social security number

a unique number assigned to all of us citizens to track social security benefits and identification purposes, not to tell anyone or carry in wallet

form 1040

individual income tax return form

many people will need to file this and not much more

you may need to fill out additional schedules - which are additional forms

irs

internal revenue service

adjusted gross income (agi)

all sources of income added up

helps you determine tax liability