Module 5 Income Taxes

Question 1

Wages that remain after taxes are withheld (net pay)

Answer 1

Take-home pay

Question 2

The total amount of a person’s income (hours worked x hourly wage)

Answer 2

Gross pay

Question 3

money collected by a government from its citizens for the purpose of operating the government (funding government services like national defense, fire+police, roads, schools, etc)

Answer 3

tax

Question 4

tax collected by a merchant when a purchase is made and then sent to the government. The merchant collects the money and sends it to the government. Imposed by city governments

Answer 4

sales tax

Question 5

vary from county to county…state to state. These taxes are based on the value of the property (the tax money is used to fund local schools)

Answer 5

real estate taxes

Question 6

federal and state taxes withheld from a person’s paycheck and sent to the government by his/her employer

Answer 6

payroll taxes

Question 7

a branch of the US treasury that carries out the federal tax system (they enforce the laws and collect the taxes)

Answer 7

Internal Revenue Service

Question 8

a formal report to the IRS that contains all of the information relative to a person’s income taxes for a specific year.

Answer 8

tax return

Question 9

when are taxes due?

Answer 9

April 15th

Question 10

deducted from your paycheck and provides payments to eligible retirees and disabled people (FICA taxes)

Answer 10

Social security

Question 11

also deducted from your paycheck…also FICA taxes. The money is used to provide health care coverage to mostly older Americans and some to younger disabled people.

Answer 11

Medicare

Question 12

a United States federal payroll contribution directed towards both employees and employers to fund social security and medicare. Employers and employees directly split the tax.

Answer 12

FICA Taxes

Question 13

your income is taxed based on your total income, filing status (married/joint or separate/dependents)

Answer 13

personal income taxes

Question 14

when you sign up for health insurance through your employer, you may see a decrease in your take-home pay depending on your company and the plan you select. Often the company will pay some, but not all, of the cost with the rest coming out of your paycheck.

Answer 14

Insurance

Question 15

a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out.

Answer 15

401k

Question 16

benefits are available to those who suffer from a disability or medical condition that makes it so they are unable to work. These benefits are offered by the social security administration and are meant to help you pay medical bills and everyday living expenses.

Answer 16

disability

Question 17

a situation of someone of working age is not able to get a job but would like to be in full-time employment. This type of insurance benefits are intended to provide temporary financial assistance to workers without jobs through no fault of their own

Answer 17

unemployment

Question 18

a form used by US taxpayers to file an annual income tax return

Answer 18

1040 form

Question 19

(single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child) are all different types of ___________es

Answer 19

filing status

Question 20

total amount of a person’s income from any source

Answer 20

gross income

Question 21

a document the employer sends to the employee detailing how much money the person made

Answer 21

W-2 form

Question 22

a taxable gain that occurs wen you sell an asset for more than you paid for it (ex: stock)

Answer 22

capital gains

Question 23

total income minus allowable amounts (ex: contributions to retirement accounts, interest on student loans, etc)

Answer 23

adjusted gross income

Question 24

fixed amount all people are allowed to deduct from their AGI to reduce tax liability. Changes every year.

Answer 24

standard deduction

Question 25

specific expenses that under tax law can be deducted to reduce the amount of income subject to tax (congress wants homeowners…interest on mortgage can be deducted)

Answer 25

itemized deduction