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Money Power > Chapter 2: Income, Benefits and Taxes (2-2: Unearned Income & Payments) > Flashcards

Chapter 2: Income, Benefits and Taxes (2-2: Unearned Income & Payments) Flashcards

1
Q

Money received from sources other than working.

A

Unearned Income

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2
Q

Money earned on savings accounts and other funds. The cost of borrowing money, or price paid or charged to borrow money.

A

Interest

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3
Q

A portion of a corporation’s profits distributed to stockholders.

A

Dividends

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4
Q

Money and benefits received from local, state or federal governments.

A

Transfer payments

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5
Q

Examples of transfer payments include:

A

Medicaid (Low-Income)
Social Security (Retirees)
Medicare (Retirees)
Unemployment (laid off workers)

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6
Q

Taxes based on the use of goods and services provided by the government.

A

Uses Taxes

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7
Q

Examples of Uses Taxes include:

A

State Park Fee
Bridge Toll
Gas Tax – pays for road & highway repairs.

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8
Q

Taxes charged on the purchase of specific goods and services.

A

Excise Taxes

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9
Q

Examples of Excise Taxes include:

A 
Gasoline
Cigarettes
Alcohol
Phone
Utilities
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10
Q

Taxes levied on consumer purchases of goods and services.

A

Sales Tax

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11
Q

Wealth taxes based on the assessed value of owned real estate.

A

Property Taxes

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12
Q

Government provided goods and services paid for by taxes.

A

Public Goods

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13
Q

Examples of Public Goods include:

A

National Defense
Public Education
Police Protection
Parks & Roads

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14
Q

Stock that pays variable dividends and gives owners (stockholders) voting rights

A

Common Stock

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15
Q

A debt instrument issued by a corporation or government

A

Bond

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16
Q

A strategy to earn more on your money than the rate of inflation

A

Investing

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17
Q

Total salary or wages earned during the pay period

A

Gross Pay

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18
Q

The amount of your paycheck after deductions

A

Net Pay

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19
Q

A person claimed as a dependant on a tax form

A

Exemption

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20
Q

A person who depends on you for more than half of his or her support

A

Dependent

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21
Q

A withholding tax to provide old-age, survivors and disability insurance

A

Social Security Tax

22
Q

A tax that pays for medical care for retired persons

A

Medicare Tax

23
Q

A form used to report taxable income a worker received during the calendar year.

A

Form W-2

24
Q

The short tax return form designed for single and joint filers with no dependents or itemized deductions.

A

Form 1040EZ

25
Q

A form used to report income and deductions claimed

A

Tax Return

26
Q

A fast, safe way to file a federal tax return electronically

A

E-filing

27
Q

Types of Earned Income include:

A 
Salaries and wages
Tips
Commissions
Bonuses
Professional fees
28
Q

Types of Unearned Income include:

A 
Interest
Dividends
Capital gains
Gambling winnings
Alimony
Social security benefits
Pensions
Annuities
Unemployment compensation
29
Q

Types of Variable Income include:

A

Business profits
Rents
Royalties
Farm income

30
Q

Medicaid is a type of benefit paid to

A

Low-income families

31
Q

Supplemental security income (SSI) is a type of benefit paid to:

A

Low-income elderly and disabled individuals

32
Q

Social security is a type of benefit paid to

A

Retirees, disabled workers, dependents

33
Q

Medicare is a type of benefit paid to

A

Retired people with social security

34
Q

Unemployment compensation is a type of benefit paid to

A

Laid-off workers

35
Q

Workers’ compensation is a type of benefit paid to

A

Workers injured on the job

36
Q

The amount of money left from revenue after a business pays all expenses.

A

Profit

37
Q

Money available to spend or save after taxes and expenses have been paid.

A

Disposable Income

38
Q

Capital gains are

A

Unearned Income

39
Q

Commission is

A

Earned Income

40
Q

Dividends are

A

Unearned Income

41
Q

Interest is

A

Unearned Income

42
Q

Salary is

A

Earned Income

43
Q

Social Security is

A

Unearned Income

44
Q

Tips are

A

Earned Income

45
Q

Unemployment is

A

Unearned Income

46
Q

Wages are

A

Earned Income

47
Q

Advantages of owning a small business are

A

Choosing what to sell, making your own hours, keeping the profits after expenses are paid

48
Q

Disadvantages of owning a small business are

A

Taking on financial risk, long hours, years of not making a profit, finding money to start the business.

49
Q

How do cash dividends differ from stock dividends?

A

Cash dividends are when a stock holder receives cash when a company pays out dividends, stock dividends are when the company pays dividends in the form of stock. Stock dividends are a reinvestment in the company.

50
Q

How can raising taxes affect the economy?

A

Raising taxes makes a person have less disposable income. With less disposable income they have less money to spend on goods and services. When they don’t spend money on goods and services business suffer by making less of a profit. If a company isn’t making money they often don’t need workers. When they don’t have a need for workers people lose their jobs and don’t have money to spend on goods and services. It is a cycle that will continue.

51
Q

Explain the difference between direct and indirect taxes? Provide examples

A

Direct taxes benefit you directly. Some examples are when you receive social security or medicare at retirement, you also benefit directly from police protection and national defense funded by taxes. Indirect benefits are when you benefit indirectly from paying taxes. An examples is when you pay property taxes to pay for public education. You may not have a student in the school district but if the school provides a good education people may want to move into the town and it will increase property value.

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