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Lawson-EPF
Unit 7 Vocabulary
| Term | Definition |
|---|---|
| 1040 | the standard Internal Revenue Service (IRS) form that individuals can use to file their annual tax returns |
| 1099 | a form that details all "non-employee" compensation, including for specific jobs like freelancers or contractors |
| capital gain | profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for |
| dependent | someone you financially support who can be "claimed" on a tax return to reduce your taxable income and lower your taxes |
| earned income | any income (wages/salary) that is generated by working |
| effective tax rate | the actual rate you pay on your taxes, as a percentage of your overall income |
| exemption | the set amount of money, per dependent, you can subtract form your taxable income |
| filing status | a category that defines the type of tax return on indvidual will use, primarily based on marital status; it also determines the size of your tax brackets and how much your income is taxed at each rate |
| I-9 | 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 |
| income tax | taxes paid by employees to federal and state governments through a direct deduction from their paycheck |
| interest income | income earned through interest on savings accounts, bonds, CDs, etc. |
| paycheck stub | a document attached to every paycheck that details your earnings and the amount withheld for taxes, health insurance, retirement funds, etc. |
| payroll tax | 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 |
| standard deduction | a standardized dollar amount that reduces your taxable income, specifically for individuals who do not receive additional benefit by itemizing their deductions into medical expenses, donations, etc. |
| tax bracket | a range of income amounts that are taxed at a particular rate |
| tax credit | an amount subtracted directly from the tax owed |
| tax deduction | an amount that can be subtracted from a person's tax liability that lowers their taxable income |
| tax rate | the percentage at which taxes are paid on each dollar of income |
| tax return | an annual report to the IRS summarizing total income, deductions, and the taxes withheld by employers |
| taxable income | the amount of income that is used to calculate an individual's or a company's income tax due |
| tax refund | an amount of money that a government gives back to a taxpayer who has paid more taxes than were due |
| unearned income | income received from sources other than employment |
| W-2 | 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 |
| W-4 | 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 |
| withholding | the portion of an employee's wages that is not included in their paycheck because it goes directly to federal, state, and local taxes |
Created by:
billie.perkins