tax vocab

ability to pay

belief that people who make more money, pay more in taxes.

direct tax

taxes that you have to pay

earned income

money that you earn, including wages, salaries, and tips

exemption

to reduce or eliminate the taxes that you pay

e-file

filing taxes electronically

fica

provides benefits to retired people- federal insurance contributions act

form w2

get it from your employer, shows how much money you made and how much you paid in taxes

from w4

filed with your employer, shows how you’re going to be taxed

payroll taxes

money taken out of your paycheck

1) federal income tax

2) state income tax

3) social security/fica

refund

money received because you paid too much in taxes

sales tax

tax on retail products

tax deduction

something that reduces your income subject to tax

tax evasion

failure to pay/ underpayment of taxes

voluntary compliance

freely/willing filing your taxes correct/on time