Tax and Social Security Review Flashcards
Tax Liability
The total amount of tax owed in a given period by individuals and organizations
Tax Deduction
A provision that reduces taxable income
Standard Deduction
A specific dollar amount that reduces the amount of income on which you’re taxed
Itemized Deduction
eligible expenses that individual taxpayers can claim on federal income tax returns and which decrease their taxable income
Dependent
A qualifying child or qualifying relative, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.
Withholding
The amount of federal income tax withheld from your paycheck
Pay as you go
Paying bills when due or paying for goods and services when purchased
Direct Tax
The tax payer pays directly to the government
Indirect Tax
Can be passed on-or-shifted-to another person or group by the person or business that owes it.
Proportional tax
The percentage of tax taken from a person’s income remains the same regardless of how much money they earn
Progressive
The average tax burden increases with income
Regressive
The average tax burden decreases with income
W-4
A federal tax form filled out by an employee to indicate the amount that should be withheld from his/her paycheck for taxes.
1040
An IRS form that people use to file their annual income tax returns.
W-2
A government form which shows a summary of your income and deductions for one employer for the calendar year
