Paycheck & Taxes
Flashcard #1 \n**Term:**
1040
\n**Definition:**
The U.S. Individual Income Tax Return form used to report annual income and calculate federal income tax liability (what you owe in taxes).
**Flashcard #2** \n**Term:**
1099
\n**Definition:**
A series of IRS tax forms used to report various types of non-employee income, such as income from freelance work, contract labor, or interest earnings.
**Flashcard #3** \n**Term:**
Capital Gains Tax
\n**Definition:**
Imposed on profits from investments and sale of real estate properties.
**Flashcard #4** \n**Term:**
Deductions
\n**Definition:**
Amounts subtracted from gross pay, including taxes, insurance premiums, retirement contributions, and other voluntary or mandatory withholdings.
**Flashcard #5** \n**Term:**
Dependent
\n**Definition:**
Someone you financially support who can be 'claimed' on a tax return to reduce your taxable income and lower your taxes.
**Flashcard #6** \n**Term:**
Earned Income
\n**Definition:**
Any income (wages/salary) that is generated by working.
**Flashcard #7** \n**Term:**
Federal Insurance Contributions Act (FICA)
\n**Definition:**
A federal law that requires an employer to withhold taxes from the wages they pay their employees; the funds go toward Social Security and Medicare.
**Flashcard #8** \n**Term:**
Filing Status
\n**Definition:**
A category that defines the type of tax return an individual will use, primarily based on marital status; it also determines the size of your tax brackets and how much of your income is taxed at each rate.
**Flashcard #9** \n**Term:**
Gross Pay
\n**Definition:**
The total amount of earnings before any deductions are taken out.
**Flashcard #10** \n**Term:**
I-9
\n**Definition:**
Form used by an employer to verify an employee's identity and to establish that the worker is eligible to accept employment in the United States.
**Flashcard #11** \n**Term:**
Income Tax
\n**Definition:**
Taxes paid by employees to federal and state government through a direct deduction from their paycheck.
**Flashcard #12** \n**Term:**
Inheritance / Estate Taxes
\n**Definition:**
Paid on the transfer of properties from a deceased person to their heirs; paid by the heirs; prevents the transmission of tax-free wealth in America's most affluent families.
**Flashcard #13** \n**Term:**
Medicare
\n**Definition:**
A federal health insurance program for people who are 65 or older, certain younger people with disabilities, and other circumstances.
**Flashcard #14** \n**Term:**
Net Pay
\n**Definition:**
The amount of earnings remaining after all deductions, such as taxes and insurance, have been taken out; also known as 'take-home pay.'
**Flashcard #15** \n**Term:**
Pay Period
\n**Definition:**
Recurring time frame during which an employee's work hours are tracked and wages are calculated and paid, typically on a weekly, bi-weekly, semi-monthly, or monthly basis (e.g., paycheck sent two times a month).
**Flashcard #16** \n**Term:**
Paycheck Stub
\n**Definition:**
A document attached to every paycheck that details your earnings and the amount withheld for taxes, health insurance, retirement funds, etc.
**Flashcard #17** \n**Term:**
Payroll Tax
\n**Definition:**
Federal and state taxes that all employers must pay, based on a percentage of the employee's salary, toward social services such as Social Security and Medicare.
**Flashcard #18** \n**Term:**
Property Tax
\n**Definition:**
Levied upon real estate or personal properties; a source of income for local government.
**Flashcard #19** \n**Term:**
Sales Tax
\n**Definition:**
Commonly used by states and local governments to raise revenue.
**Flashcard #20** \n**Term:**
Sin Tax
\n**Definition:**
Levied upon luxury goods or 'vice' items such as jewelry, tobacco, and alcohol.
**Flashcard #21** \n**Term:**
Social Security
\n**Definition:**
A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals.
**Flashcard #22** \n**Term:**
Tax Refund
\n**Definition:**
An amount that a government gives back to a taxpayer who has paid more taxes than were due.
**Flashcard #23** \n**Term:**
Taxes
\n**Definition:**
Mandatory contributions levied by governments on individuals or businesses to fund public services.
**Flashcard #24** \n**Term:**
W-2
\n**Definition:**
A form that an employer must send to an employee and the IRS at the end of the year to report the employee's annual wages and taxes withheld from their paycheck.
**Flashcard #25** \n**Term:**
W-4
\n**Definition:**
A form completed by an employee to indicate his or her tax situation (exemptions, marital status, etc.) to the employer, who then withholds the corresponding amount of taxes from each paycheck.
**Flashcard #26** \n**Term:**
Withholding
\n**Definition:**
The portion of an employee's wages that is not included in their paycheck because it goes directly to federal, state, and local taxes.