Chapter 2: Income, Benefits and Taxes (2-3: Taxes and Other Deductions) Flashcards
Your total salary or wages earned during the pay period
Gross pay
The amount of you paycheck after taxes and other deductions are withdrawn
Net Pay
A person claimed as a dependent on a tax return
Exemption
A person who depends on you for more than half of his or her support
Dependent
A withholding tax to provide old age, survivors, and disability insurance
Social security tax
A tax that pays for medical care for retired persons
Medicare tax
An insurance plan that pays medical and disability benefits to workers injured on the job
Workers’ compensation
A form used to report taxable income a worker received during the calendar year
Form W-2
the short tax return form designed for single and joint filers with no dependents or itemized deductions
Form 1040EZ
A fast, safe way to file a federal tax return electronically
E-filing
Also known as the long form, it is used by taxpayers that want to itemize their deductions
Form 1040
List required deductions for taxes
Federal income taxes, state income taxes, social security taxes, medicare taxes, workers’ compensation taxes
List optional deductions for taxes
health insurance, life insurance, disability insurance, dental insurance vision insurance, flex 125, long-term care insurance, retirement plans, stock purchase plan
How does gross pay differ from net pay?
Gross pay is pay before taxes and other deductions are taken out of your pay check. Net pay is your paycheck after taxes and deductions are taken out. Net pay is what you take home.
Who does medicare taxes benefit?
Individuals 65 years and older who are retired and receive social security benefits.
