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EPF M1 Review
Economics & Personal Finance Module 1 Review
Term | Definition |
---|---|
Quality of Life | A comprehensive measure of an individual’s overall well-being. |
Education | Involves obtaining and developing knowledge and skills often in a school or training setting. |
Income | The amount of money that an individual earns for work completed. |
Workforce | The amount of people within a country who are able to do a job and are available for employment. |
Career | A profession that someone feels passionate about that they participate in for a long time in their life span. Typically involves more education or training. |
Job | Work that provides someone an income. |
Wage | The amount of money that is regularly paid to someone for the work that they complete, typically on an hourly or completion basis. |
Salary | The set amount of money that is paid to someone each month or year from their employer. |
Employee Benefits | A form of compensation that can be non-cash or cash provided by employers to employees over and above regular salary or wages including health insurance, vacation time, etc. |
Employee Incentives | Used to motivate employees to meet goals for their business (i.e. rewards and privileges). |
Gross Pay | The amount of money received before taxes and deductions are taken out. |
Net Pay | The amount of money that remains after taxes and deductions are taken out that an employee gets to take home with them. |
Disposable Income | The income a person has left after all taxes have been paid. This is used to buy necessities. |
Discretionary Income | Income left after disposable income, which can be saved or spent on luxury items or entertainment. |
Personal Net Worth | A balance of your assets (the things you own) minus your debts (the things you owe). |
Scholarships | Financial assistance for college based on merit. |
Grants | Financial assistance for college based on needs. |
FAFSA | Free Application for Federal Student Aid which is used to determine a family’s eligibility for grants, work-study, and loans to pay for college. |
Coverdell Accounts and 529 Plans | Tax advantaged savings accounts that can be used for educational purposes. |
Full Time Employment | When an employee is working for at least 30 hours a week, or 130 hours per month. |
Part Time Employment | When an employee works less than 30 hours per week, less than 130 hours per month. |
Contract Employment | Hired as a temporary employee due to their expertise in a specific area and complete a specific project within a certain timeframe. |
Active Income | Income received from performing a service and includes wages, tips, salaries, commissions, and income from businesses in which there is material participation. |
Pension | Payment made to people who have retired from work. |
Unemployment Compensation | Paid by the state to unemployed workers who have lost their jobs due to layoffs or retrenchment. It is meant to provide a source of income for jobless workers until they can find employment. |
Social Security | Federal insurance program workers pay into until they retire or are no longer able to work. |
Portfolio Income | Money received from investments, dividends, interest, royalties from an investment, and capital gains. |
Dividends | A reward, cash, or etc., that a company gives to its shareholders. Dividends can be issued in various forms, such as cash payment, stocks or any other form. |
Stock Options | Contracts given to an employee by an employer, contractors, consultants, and investors. The contracts grant the right to buy or exercise a set number of shares of the company stock at a pre-set price, also known as the grant price. |
Capital Gains | Profit one earns on the sale of an asset like stocks, bonds or real estate. It results in capital gain when the selling price of an asset exceeds its purchase price. |
Capital Loss | Reverse of capital gain or it results in a loss when the investment is sold. |
Annuity | Series of payments made at equal intervals such as regular deposits to a savings account, monthly home mortgage payment, monthly insurance payment, and pension payments. |
Passive Income | Income generated is when you make money from an enterprise where you’re not materially involved. This means you’re the silent partner, the investor, the person who is not running the show. |
Rental Income | Income received from rental properties or goods. |
Business Income | Income received from the sale of products or services. |
Inheritance | Assets passed down to individuals after someone dies. |
Lump Sum Distributions | One-time payment for an entire amount due, rather than payments broken into smaller installments. |
Gambling Gains | Any money that is generated from games of chance or wagers on events with uncertain outcomes. |
Gambling Losses | Loss resulting from games of chance or wagers on events with uncertain outcomes. |
Barter | Exchanging goods or services without using money. |
Royalty | Income paid for the use of an original work such as art, music, a logo, film or book. |
Payroll Tax | Percentage of money withheld from your paycheck by your employer who then pays it the government for you. In the US, this is FICA. |
FICA | Federal Insurance Contributions Act which includes payroll taxes for Medicare and Social Security. |
Social Security | An insurance program. Workers pay into the program for at least 10 years or more and can collect money once they turn 62. If they wait until age 70 to collect, they will receive more benefits. |
Medicare | A federal health insurance program for Americans 65 years or older and some people with disabilities. |
Progressive Tax System | People that make more money (or who have higher taxable incomes) pay more federal income taxes. People who have less taxable income, pay less federal income taxes. |
Taxable Income | Determined by the amount of income remaining after deductions. |
Deductions | Reductions to your income in terms of how it counts for taxes. |
Tax Brackets | Ranges of income taxed at different rates. Your tax bracket depends if you are married and filing your taxes together or jointly, married and filing separately, the head of the household, or if you are single. |
Capital Gains Tax | A tax on the growth in the value of investments. Taxes are paid when the assets are sold. |
Estate Taxes | Taxes that are paid on the inheritance of assets following the death of an individual. Not all states have estate taxes. |
Property Taxes | Taxes paid on property owned. |
Sales Tax | Taxes on the sale of goods and services. |
Excise Tax | Taxes that are put on specific goods, services, and activities such as coal, fuel, sports wagering, and indoor tanning. |
1040 Form | What individual taxpayers use to file their taxes with the IRS. Helps individuals determine if they owe taxes or if they will get a tax refund. |
1099 Form | This is to report information on the income you receive outside of your typical salary, for example with contract work. |
W-2 Form | The document that your employer sends to you and the IRS at the end of the year that reports your wages and amount of taxes withheld from your paycheck. |
W-4 Form | Form that informs your employer of your tax situation and informs them how much tax to withhold from your paycheck based on your marital status and other deductions. |
W-9 Form | This form confirms a person’s name, address, and taxpayer identification number (TIN) for employment or income purposes. |
I-9 Form | Verification of identity and legal authorization to work. |