| Question |
Answer |
| tax liability |
the TOTAL amount of TAXES a person OWES |
| excise tax |
a tax collected by federal and state governments on specific GOODS and SERVICES |
| estate tax |
a tax collected on the value of a person's PROPERTY at the time of his or her DEATH |
| inheritance tax |
a tax collected on the property left by a person in his or her WILL |
| gift tax |
a tax collected on money or property valued at more than $10,000, GIVEN by one person to another in a single year. |
| withhold |
TO TAKE OUT Social Security and income tax payments from an employee's PAYCHECK and send the money to the IRS |
| income tax return |
A FORM on which a person reports how much money he or she received from working and other sources and the exact taxes, if any, that the person owes |
| earned income |
the MONEY a person receives for WORKING |
| interest income |
the INTEREST a person receives from banks, credit unions, and savings and loan associations. |
| dividend income |
distributions of money, stock, or other property that a corporation sometimes PAYS to STOCK-HOLDERS |
| exclusion |
an amount of income that is NOT INCLUDED in a person's gross income and is NOT subject to taxes; also called tax-exempt income. |
| adjusted gross income |
a person's INCOME AFTER CERTAIN REDUCTIONS have been made, such as contributions to an IRA or interest on a loan |
| taxable income |
a person's adjusted gross income LESS any allowable tax deductions and exemptions |
| tax deduction |
An expense that a person is allowed to SUBTRACT from his or her adjusted gross income to arrive at his or her taxable income |
| standard deduction |
an amount set by the IRS on which NO TAXES ARE PAID |
| itemized deduction |
a SPECIFIC expense, such as mortgage interest, that a person DEDUCTS from his or her adjusted gross income |
| exemption |
a deduction from a person's adjusted gross income for that person, his or her SPOUSE, and qualified DEPENDENTS. |
| tax credit |
an amount subtracted directly from the amount of taxes a person owes |
| allowance |
an ADJUSTMENT to the TAX WITHHELD from an employee's paycheck, based on his or her marital status and whether he or she is supporting other people with his or her money |
| tax audit |
a procedure where an IRS agent looks carefully at the tax returns you have filed |
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