Taxes Vocab

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financial literacy

24 Terms

1

1040

What individual taxpayers use to file their taxes with the IRS

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2

1099

A collection of forms used to report payments that typically aren't from an employer

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3

401(k)

An employer-sponsored retirement savings plan that offers significant tax benefits while helping you plan for the future

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4

Deduction

An amount you subtract from your income when you file so you don't pay tax on it

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5

Dependent

A qualifying child or relative who relies on you for financial support

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6

Discretionary Government Spending

Money formally approved by Congress and the President during the appropriations process each year

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7

Earned Income

All the taxable income and wages you get from working for someone else, yourself or from a business or farm you own

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8

Employer Contributions

The taxes an employer pays in order to employ someone in a certain country

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9

FICA

a U.S. federal payroll tax

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10

Gross Pay

What employees earn before taxes, benefits and other payroll deductions are withheld from their wages

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11

Household Employee

Housekeepers, maids, babysitters, gardeners, and others who perform household work in or around your private residence as your employee

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12

I-9

A work authorization document that employers are required to file and retain when they hire a new employee, to prove they are legally entitled to work in the US

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13

Income Taxes

A type of tax governments impose on the income that businesses and individuals generate

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14

Mandatory Government Spending

Funding for entitlement programs like Medicare and Social Security and other payments to people, businesses, and state and local governments

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15

Medicare

A federal employment tax that funds a portion of the Medicare insurance program

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16

Net Pay

The amount of money employees actually take home after all payroll deductions

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17

Pre-tax Deductions

Any money taken from an employee's gross pay before taxes are withheld from their paycheck

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18

Refund

When their total tax payments are greater than the total tax

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19

Self-Employed

You carry on a trade or business as a sole proprietor or an independent contractor

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20

Social Security

A percentage of gross wages that most employees, employers and self-employed workers must pay to fund the federal program

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21

Unearned Income

Includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions

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22

W-2

An IRS tax form used in the United States to report wages paid to employees and the taxes withheld from them

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23

W-4

States any additional amount to withhold from each paycheck to use to compute the amount of federal income tax to deduct and withhold from the employee's pay

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24

Withholding

The income an employer takes out of an employee's paycheck and remits to the federal, state, and/or local government

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