Unit 2 Personal Finance - Plan for Your Future

compensation

total cash and non-cash payments that you give to an employee in exchange for the work they do for your business

hourly wages

paid an hourly rate

salary

pay quoted on an annual basis

overtime pay

any work that exceeds 40 hours in a week or 8 hours in a day

payroll card

a prepaid card an employer loads an employee's pay onto each payday

FICA

a federal law that requires two taxes to be withheld from pay - Social Security and Medicare

Social Security

helps older Americans, workers who become disabled, and families in which a spouse or parent dies

Medicare

federal health insurance program for people who are 65 or older

gross pay

Income before any deductions are taken out

net pay

income after taxes and deductions have been taken out; take home pay

income tax

Government tax on income imposed on businesses and individuals

sales tax

Consumption tax imposed by government on the sale of goods and services

excise tax

indirect tax on specific goods, services, and activities

property tax

tax paid on property owned

inheritance tax

tax paid by those who inherit assets

earned income

salaries, wages and tips

unearned income

interest, social security, dividends, capital gains

W-4

Federal tax form that you fill out when you first start a job to tell how much federal income tax to take out of your paychecks

Form 1040

Federal tax form you fill out annually to see if you owe taxes or get a tax refund

W-2

Federal tax form that you receive from each employer summarizing your earnings and taxes withheld during one year

tax credit

An amount subtracted directly from the tax owed

tax deduction

An amount subtracted from gross income to determine taxable income