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Chapter 3
Income & Taxes
| Term | Definition |
|---|---|
| Earned Income | The income you receive from employement or from self-employment |
| Wage | Payment for work and is usually calculated on an hourly, daily, or piecework basis(is paid on a schedule- often every week or every two weeks) |
| Minimum Wage | The lowest hourly wage employers can pay most workers by law |
| Overtime Wage | The amount paid for working time in a week that is beyond the standard 40-hour workweek |
| Piecework | A wage based on a rate per unit of work completed |
| Salary | A fixed payment for work and is expressed as an annual figure (it is paid in equal payments)_ |
| Commission | Income paid as a percentage of sales made by a salesperson |
| Tip | (Or gratutity) Money paid for service beyond what is required |
| Bonus | Money added to an employee's base pay ( It is usually a reward for performance or a share of business profits) |
| Gross Pay | (Gross Income) Total income before payroll deductions |
| Payroll Deduction | A subtraction from your gross pay |
| Net Pay | (Take-home pay) Gross pay(plus bonuses, if you get them) minus payroll deductions |
| FICA taxes | (Social Security and Medicare Taxes) Taxes paid by the employee and employer that are used to finance the federal Social Security and Medicare programs |
| Compensation | The payment and benefits received for work performed |
| Employee Benefit | (Fringe benefit) A form of noncash compensation received in addition to a wage or salary (offer important financial advantages) |
| Form W-2 | A Wage and Tax Statement that shows your earnings and the amounts of income, Social Security, and Medicare taxes withheld from your income during the year (usually mailed to home by 31st after the income was earned) |
| Unearned Income | Earnings from sources other than work |
| Tax deduction | An amount that is subtracted from your adjusted gross income, which further reduces your taxable income |
| Itemized deduction | An allowed expense that you can deduct from your adjusted gross income |
| Standard deduction | A fixed amount that may be deducted form adjusted gross income (is set by by law and varies according to the taxpayer's filing status) |
| Exemption | An amount that a taxpayer can claim for each perosn who is dependent on that person's income |
| Tax credit | An amount that is subtracted form the taxes you owe if you are eligible |
| Entilement | A government payment or benefit promised by law to eligible citizens |
| Social Security | A federal program that provides income when earnings are reduced or stopped because of retirement, serious illness or injury, or death |
| Medicare | A federal program that pays for certain health-care expenses for older citizens and others with disabilities |
| Disability | A limitation that affects a person's ability to function in major life activities |
| Medicaid | A government program that pays certain health-care costs for eligible, low-income individuals and families |
Created by:
Jakea Harris
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