Unit 4 Taxation Practice Flashcards

This flashcard set covers key terminology, tax forms, and calculations related to payroll, withholdings, and retail taxes based on the Unit 4 exam review.

Sales tax

A tax on retail products based on a set percentage of the retail price.

Withholdings

Amounts held back from paychecks based on marital status and the number of dependents.

Standard deduction

On a Form 1040, this is a specific amount determined by an individual's filing status.

Tax-impacting factors

Key factors that impact the amount someone may pay in taxes, including state of residence, income, and marital status.

Tax Under-withholding

A situation where not enough money is held back from paychecks, resulting in the taxpayer owing a payment to the IRS after filing.

Effective tax rate

A tax rate that is most likely to increase as an individual's income increases.

Spartanburg county hospitality tax

A $2\%$ tax on ready-to-eat food or drink items prepared on-site at restaurants, grocery stores, and certain other businesses.

South Carolina State Sales & Use Tax exemption

A $1\%$ exemption on purchases for personal use for individuals who are $85$ years old or older.

Form 1099

The tax form received for earning income (such as selling items on an online auction site) when not employed by the entity providing the income.

Form I-9

The tax form used to provide identification and prove eligibility to work in the U.S.

Form W-4

A form completed by the employee that determines how much Federal income tax money an employer should withhold from paychecks.

Standard Payroll Withholdings

Taxes typically withheld from paychecks, including Federal income tax, Medicare, and Social Security.

Gross Income calculation

The sum of net income and total withholdings; for example, $\$753.89 + \$231.21 = \$985.10$.

Federal tax withholding calculation

The amount determined by multiplying the gross income by the tax rate; for example, \3206.00 \times 14\% = \$448.84$.

Bi-weekly gross pay calculation

The amount of a single paycheck for a salaried employee paid every two weeks, calculated as $\text{annual salary} / 26$; for example, $\$89000 / 26 = \$3,423.08$.