Personal Finance - Taxes, Unit 1

Gross Pay

Pay before taxes

Net Pay

Pay after taxes

Federal Tax

Tax for the country/government

State Tax

Tax for your state (S.C.)

Local Tax

Tax for your city/town (Lexington)

Social Security (part of FICA)

Retirement money for old people

Medicare (part of FICA)

Health insurance for old people

Wage

Set $ per hour. Minimum age in S.C. is $7.50 per hour.

Salary

Set $ per year

Tips

Extra money that you give for good service. Required at places like restaurants. Example: you already earn $2.13/hour, plus (usually 15%) tips for your service.

Tax Form 1040

To report your yearly income and report taxes owed or refund

Tax Form W-2

Shows your yearly wages and taxes withheld

Tax Form W-4

Tells employer how much tax to withhold from your paycheck

Tax Form 1099

Reports money paid to freelancers/independent contractors

Tax Form I-9

Verifies a person is legally allowed to work in the U.S.

Tax Form Names

1040, W2, W4, 1099, & 1-9

YTD

Year To Date (the time between Jan 1st & current pay period)

Income Tax

Tax on money you earn

Sales Tax

Tax on money you spend

Property Tax

Tax on valuable stuff you own

Pay Stub

Document detailing your pay (shows you where all your money is going)

Direct Deposit

Money that goes straight to your account

Tax Return

Annual statement assessed by the IRS; determines if you paid too much in taxes or not enough

Tax Deduction

Something that partially takes taxes away (charity donation, dependent, business expense, etc)

Dependent

Someone who has someone else responsible for them financially

People who qualify to be Dependents

People with disabilities, really old people, children, 19-24 aged full-time students

IRS

Internal Revenue Service (responsible for administering and enforcing the nation’s tax laws)

How To Tip

Giving an extra amount of money to someone who has provided a service for you. You take a percent of the $ of what the service cost, and give it to them. It’s usually 15%.

Tax Day

April 15, 2026