Economy- Taxes

W-2 Form

An IRS tax document that employers must complete for each employee, detailing wages paid and taxes withheld during the year. This form is essential for employees to accurately file their income tax returns.

Internal Revenue Service

The federal agency responsible for administering and enforcing the United States tax laws. It oversees tax collection and ensures compliance with tax regulations.

1099 Form

A tax form used to report income from self-employment, freelance work, or other sources outside of regular employment, issued by the payers to the recipients and the IRS.

W-4 Form

A form used by employees to indicate their tax withholding preferences to their employer, helping to determine the amount of federal income tax withheld from their paycheck.

I-9 Form

A form used to verify the identity and employment eligibility of individuals hired for employment in the United States.

1040 Form

A tax form used by individuals to file annual income tax returns with the IRS, detailing income, deductions, and tax credits.

Withholding

How much is being taken out of your paycheck.

Refund

If you complete your 1040 form and find out you overpaid, you can get a refund.

Paystub

A document that details an employee’s earnings and deductions for a specific pay period.

401k Contribution

A type of retirement savings plan where the employee contributes a portion of their paycheck to an individual account.

Gross Pay

Your total pay free of deductions.

Net Pay

Your take-home pay; gross pay-deductions

Involuntary Deductions

1. Federal Insurance Contribution Act

2. Social Security

3. Medicare

4. Income Tax

Voluntary Deductions

1. 401k Contributions

2. Health Insurance

3. Life Insurance

4. Pre-tax Health Savings Plan

5. Short-term Disability

6. Donations

Steps for Filing your Taxes

1. Determine your filing status

2. Determine your gross income

3. Determine your adjusted gross income

4. Calculate deductions and exemptions

5. Determine your refund/payment

Progressive Tax

Upper income pay more taxes

Regressive Tax

Lower and middle income pay more taxes

Proportional Tax

Everyone pays the same taxes