Section 2.2 Taxes Vocabulary

income

Income from all sources including multiple W2s

Taxable Income

Income from all sources minus exemptions & deductions

Form W2

wage and tax statement; states the amount of money earned and taxes paid through the previous year

Form W4

Form you complete to help employer determine how much to withhold in federal income tax for you

Form 1099INT

a statement of the interest your bank paid on your savings that year

Form 1040

A form you complete to compare the amount of federal tax you owe to the amount of tax collected throughout the last year.

IL-1040

the Illinois state income tax form, which you fill out after you file your federal tax form

Tax exemptions

Amount that taxpayers who meet certain criteria can subtract from income to lower their taxable income.

tax deduction

A donation or expense that reduces the taxable income amount.

Tax credits

deductions from a taxpayer's tax liability that directly reduce his or her taxes due (rather than reducing taxable income)

dependent

A person who relies on the taxpayer for financial support