Personal Finace Taxes

Last Test

1040

The standard Internal Revenue Service (IRS) form that individuals can use to file their annual income tax returns

1099

A form that details all "non-employee" compensation, including for specific jobs like freelancers or contractors

Audit

An inspection of a filer's tax return by the IRS

Discretionary spending

Spending by the federal government determined by legislative action and approved through votes by elected officials

Dependent

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

Dividend

Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis

Exemption

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

FICA

A federal law that requires an employer to withhold taxes from the wages they pay their employees; the funds go toward Social Security and Medicare

Filing Status

A category that defines the type of tax return an individual will use, primarily based on marital status; it also determines the size of your tax brackets and how much of your income is taxed at each rate

Income Tax

Taxes paid by employees to federal and state government through a direct deduction from their paycheck

Mandatory Spending

Spending by the federal government required by previously existing laws, including funding programs like Social Security and Medicare/Medicaid

Medicaid

A government-run insurance program that provides healthcare assistance to low income Americans

Medicare

A government-run insurance program that provides healthcare assistance to elderly and disabled Americans

Paycheck Stub

A document attached to every paycheck that details your earnings and the amount withheld for taxes, health insurance, retirement funds, etc.

Social Security

A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals

Standard Deduction

A standardized dollar amount that reduces your taxable income, specifically for individuals who do not receive additional benefit by itemizing their deductions into medical expenses, donations, etc.

Progressive Tax

A tax system that uses tax brackets to collect a larger percentage from the income of high-income earners than it does from low-income earners

Taxable Income

The amount of income that is used to calculate an individual's or a company's income tax due

Tax Refund

An amount that a government gives back to a taxpayer who has paid more taxes than were due

Withholdings

The portion of an employee's wages that is not included in their paycheck because it goes directly to federal, state and local taxes