Income and Taxes (PF)

1040 form

The standard tax form that individuals in the United States use to submit their taxes to the internal revenue service

1099 form

A tax form that independent contractors receive from each company or client that pays them in a calendar year

Deductions

Expenses that reduce a persons tax liability by lowering that persons taxable income

Dependent

A person who relies on someone else for financial support. Dependents are claimed ok tax returns in order to lower the amount of taxable income. Children are one example of dependents

Employee benefit

A nonwage form of compensation provided to employees in addition to their wages or salaries

Estimated tax payments

A semiannual payment of taxes due based on a taxpayers previous years taxes, required of small business owners and independent contractors

FICA

A mandatory federal payroll tax that funds social security and Medicare. It stands for the federal insurance contributions act and is deducted from each paycheck

Gig economy

A labor market consisting of a number of short term contracts or freelance work. In gig economy companies usually hire independent contractors and freelancers instead of permanent or full time employees

Gross income

The amount of money, a person earns before anything is taken out for taxes or other deductions

Income tax

Attacks applied by the government on a persons income. This tax is applied annually.

Independent contractor

A person or business that provides goods or services by contract or agreement

Interest

The fee paid for using other people‘s money also called finance charge

Example, the interest on a loan is an individual is the money that must be prepaid beyond the amount of the loan the interest on bank account is the money paid to individuals so the banks can use their money to make investments

Internal revenue service

Known as IRS and is a federal agency that is in charge of collecting taxes, enforcing tax laws

Labor market

The availability of labor and employment as in the supply in demand for labor

Marginal tax rate

The tax rate that corresponds to an individuals or couples income bracket

Net income

Total earnings minus all expenses, taxes, and interest

Payroll deduction

A mandatory or voluntary deduction that is subtracted from an employees gross income

Progressive tax

A tax of taxation in which the right people pay is based on their income, the higher someone’s income, the higher, the person‘s tax rate

Property tax

Tax applied by the government to people who own property usually real estate this tax is applied annually

Regressive tax

A type of taxation that requires all people to pay the same amount regardless of income

Salary

And agreed upon annual payment for a job paid at set intervals

Sales tax

A tax applied by the government on the sale of goods and services. This tax is usually paid at the time of purchase.

Tax credit

A credit that applies to the amount of tax owed

Tax refund

A reimbursement to a taxpayer of excess taxes paid to a tax entity

Tax income

The income on which a taxpayer has to pay tax after deductions have been subtracted

W-2 form

An employer issued form listing and employees, total earnings and tax deductions in order for the employee to file a tax return

W-4 form

A form an employee fills out to help an employer determine how much tax to withhold for the employee

Wage

The money you are paid that is based on the number of hours you work multiplied by the rate earned per hour

Withholdings

Deduction from income