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Financial lit
| Term | Definition |
|---|---|
| Commission | performance based pay, selling goods or services |
| bonus | amount of money added to a wage on a seasonal basis |
| pre-tax deduction | funds withheld from an employee's gross pay before federal, state, and local income taxes are applied |
| HSA | Health savings account, saving account for medical expenses, pre tax dollars |
| FSA | flexible spending account, set aside a portion of their paycheck for medical or dependent care expenses, pre tax, use or lose |
| FMLA | U.S. federal law providing eligible employees with up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons |
| Workers compensation | state-mandated, no-fault insurance program that provides medical care, wage replacement, and rehabilitation benefits to employees injured on the job |
| Federal/state W4 | determine the correct amount of federal/state income tax to withhold from each paycheck., helps avoid overpaying or owing taxes |
| federal Income tax | Mandatory taxes to fund national programs |
| State income tax | Mandatory taxes to fund public services like education, infrastructure, and public safety |
| SS tax | mandatory taxes to fund social security benefits |
| Medicare tax | Mandatory taxes that fund hospital insurance/medicare for old & disabled people |
| Income tax return | annual report that details income, deductions, and credits, determines if you owe additional taxes or are entitled to a refund |
| Standard deduction | fixed dollar amount you subtract from your income to lower your taxable income |
| Itemized deduction | specific expenses that taxpayers can subtract from their AGI to lower taxable income, used instead of the standard deduction when the total exceeds the flat amount |
| AGI | Adjusted Gross Income, number the IRS uses to determine your income tax owed |
| W2 | reports an employee's total wages, withholding, and deductions |
| form 1040 | used by taxpayers to file annual income tax, calculates total taxable income, determines tax liability, and determines if a refund is owed or if additional taxes are due. |
| What do tax deductions do | Reduce taxable income |
| what do tax credits do | reduce tax liability |
| taxable income | AGI- Standard deduction |
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