Ch 2 Income Sources

Question 0

Overtime

Answer 0

1 1/2 times regular pay for hours above 40 per week

Question 1

Wages

Answer 1

Employee paid for each hour worked

Minimum wage: the lowest pay rate allowed by law for each hour of work

Question 2

Salaried workers

Answer 2

Set salary (per month or year) do not keep time cards or count hours worked, flexible work times, 40+ hours/week, no overtime

Question 3

Tips (“To Insure Prompt Services”)

Answer 3

Money, often a % of total bill, or gift given to a person for performing a service

Question 4

Commission

Answer 4

Set fee of % of a sale paid to a salesperson, instead of or in addition to salary or wages

Question 5

Entrepreneur

Answer 5

Person who takes risks of being self-employed and owning a business

Advantages- Owner can make decisions, keeps all earnings or profits

Disadvantages- if business fails, money invested may be lost, work long hours

Question 6

Profit

Answer 6

Amount left after all costs are deducted from income

Question 7

Pay without work (employee benefit)

Answer 7

Employee not working will be paid (vacation, paid holidays, sick leave)

Question 8

Educational reimbursement (employee benefit)

Answer 8

Pay back money spent on education

Question 9

Perks (employee benefit)

Answer 9

Provide emotional satisfaction or social status Reuther than money

Question 10

Insurance (employee benefit)

Answer 10

Price paid for health insurance called premium

Question 11

Retirement plans (employee benefit)

Answer 11

(401 K) allows employees to put aside money for retirement

Question 12

Profit sharing plans (employee benefit)

Answer 12

When the company does well, employees are paid a share of profits

Question 13

Stock option plans (employee benefit)

Answer 13

Buy a stock in the company at reduced price

Question 14

Short term disability

Answer 14

Coverage for up to 2 years

Question 15

Long term disability

Answer 15

Coverage for longer than 2 years and up to retirement

Question 16

(FSA) Health flexible spending arrangements (employee benefit)

Answer 16

Allows employees to set aside money to pay for qualified medical expenses

Question 17

401 k

Answer 17

Allows employees to put aside money that is not subject to federal income tax at the time it is earned; will be taxed later and some employers may match contributions

Question 18

Networking

Answer 18

Process of making contacts and building relationships with other people

Question 19

Ethics

Answer 19

Employers expect workers to be honest in their dealings with the company, using sick leave

Question 20

Unearned income

Answer 20

Money received from sources other than working a job (taxable)

Question 21

Dividend

Answer 21

money shared w/ stockholders when corporate makes profits

Question 22

Transfer payments

Answer 22

Money and benefits received from local, state, or federal govts

Question 23

In kind transfer payments

Answer 23

Vouchers that can be exchanged for goods and services (food stamps etc.) do not receive money directly

Question 24

In cash transfer payments

Answer 24

Money in the form of a check, debit card, or other direct payment (social security, payments, unemployment)

Question 25

Taxes

Answer 25

A required payment for the support of a govt, such as income or sales tax paid on earned and unearned income

Question 26

Costs of taxes

Answer 26

Paying taxes reduces
Disposable income
Less money is left to spend or save
Lower spending may affect the economy

Question 27

Benefits of taxes

Answer 27

Taxes benefit taxpayers
-S. S. Tax provides retirement benefits to workers
Taxes benefits all residents
-highways, parks, Govt transfer payments

Question 28

Use taxes

Answer 28

Taxes paid by people who use certain goods or services such as visiting parks

Question 29

Excise taxes

Answer 29

Charges on the purchase of specific goods such as motor fuel, cigs, alcohol

Question 30

Luxury taxes

Answer 30

Charged on products not considered essential for a normal standard of living like an expensive car

Question 31

Social security benefits

Answer 31

Workers pay into the SS fund and receive a statement each yr payments are matched by employers worker receives monthly benefit checks when retired

Question 32

Taxes and disposable income

Answer 32

Wages, salaries. And business profits are taxable
Some unearned income is taxable
Lower taxes result in higher disposable income
Higher taxes result in lower disposable income

Question 33

Required deductions

Answer 33

Money withheld from a workers paycheck
Gross pay minus taxes and other deductions equals net pay
-income tax
-social security tax
-Medicare tax
-workers compensation insurance

Question 34

Income tax (required deduction)

Answer 34

Withheld according to nome amount and exemptions claimed in Form W-4

Question 35

Social security tax (required deduction)

Answer 35

Withheld by federal govt
Provides system of old age, survivors, and disability insurance
Requires employer to verify that workers and eligible for employment
Requires workers to complete parts of Form I-9, employment eligibility verification

Question 36

Medicare tax (required deduction)

Answer 36

Withheld by federal govt
Pays for medical care for retired persons and those who receive SS benefits
Paid by workers and employers

Question 37

Workers compensation insurance (required deduction)

Answer 37

Insurance plan, pays medical and disability benefits to workers who are injured or contract diseases in the job, laws and programs vary by state, premiums are paid primarily by employers

Question 38

Optional deductions

Answer 38

Payments for items other than taxes that are subtracted from a workers pay (ex. Health insurance, vision, savings plan, retirement plan)

Question 39

Federal tax filing

Answer 39

Whether US citizens must file a federal income tax return depends upon: gross income, filing status, age, whether you are a dependent

Question 40

From W-2

Answer 40

Used to report the taxable income a worker received during a calendar yr

Question 41

Form 1040EZ

Answer 41

Designed for use in filing income taxes by single and joint filers with no dependents

Question 42

Form 1040A

Answer 42

2 page form designed for use in filing income taxes

Allows more options for income and deductions to be entered