taxes test

Federal Unemployment Tax Act (FUTA)

A federal program that provides temporary financial assistance to unemployed workers who lose their jobs through no fault of their own.

Income Tax

A tax imposed on the income generated by an individual or business, divided into federal, state, and local income tax.

Medicare Tax

A tax that funds health insurance for citizens 65 years of age and older, and for younger people receiving disability benefits through Social Security.

Progressive Tax System

A tax system where the tax rate increases as the taxpayer's income increases.

Property Tax

A tax imposed on real estate or other forms of property, based on the value of the property.

Sales Tax

A consumption tax paid by the end consumer of goods and services, collected and remitted by the seller to the appropriate government agency.

Social Security Tax

A tax that funds financial assistance for retirement, disability, and survivors.

State Unemployment Tax Act (SUTA)

A state program that provides temporary financial assistance to unemployed workers who lose their jobs through no fault of their own.

Tax Liability

The amount of money owed by a person or organization to a taxing authority, such as federal, state, and local governments.

Tax Return

A form or set of forms filed with the government to report income, taxes already paid, and taxes still owed.

Withholding

The process by which an employer deducts a portion of an employee's wages for taxes and other benefits before paying the employee.

Filing Status

A category that defines a taxpayer's marital and family situation affecting tax rates and eligibility for certain tax benefits.

Adjusted Gross Income (AGI)

A taxpayer's total income for the year minus specific eligible deductions, used to calculate eligibility for various benefits.

Taxable Income

The portion of income subject to income tax, calculated by subtracting deductions from AGI.

Dependent

A person who relies on the taxpayer for financial support and for whom the taxpayer can claim a dependency exemption.

Tax Credit

A direct reduction in the amount of taxes owed by a taxpayer, reducing the actual tax liability on a dollar-for-dollar basis.

Form W-2

A tax form an employer prepares to report an employee’s annual compensation and tax-related withholding amounts.

Standard Deduction

A fixed dollar amount that reduces a taxpayer’s taxable income, varying based on filing status.

Itemized Deductions

Specific expenses that taxpayers can claim to reduce taxable income, including medical expenses and charitable donations.

Tax Day

April 15th, the official deadline for individuals and businesses to file their federal tax returns for the previous year.

Tax Refund

The amount of money returned to a taxpayer by the government when they overpay their annual taxes.