Taxes Vocab

financial literacy

1040

What individual taxpayers use to file their taxes with the IRS

1099

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

401(k)

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

Deduction

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

Dependent

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

Discretionary Government Spending

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

Earned Income

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

Employer Contributions

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

FICA

a U.S. federal payroll tax

Gross Pay

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

Household Employee

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

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

Income Taxes

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

Mandatory Government Spending

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

Medicare

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

Net Pay

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

Pre-tax Deductions

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

Refund

When their total tax payments are greater than the total tax

Self-Employed

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

Social Security

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

Unearned Income

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

W-2

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

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

Withholding

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