Unit 1 Flashcards
Annual Percentage Rate (APR)
Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
Investments
Money put into an account intended for growth
W2
Report sent from the employer to the employee, showing gross income, total taxes paid, and total voluntary deductions.
W4
The form you fill out when you start a new job.
Income tax
Tax paid to the state, federal, and local governments based on income earned over the past year.
Typically higher at the federal level.
Some states don’t have income tax at all.
Assets
Money and other valuables belonging to an individual or business
Liabilities
Debts that you owe
Net worth
Total assets minus total liabilities
Commission
An amount paid to an employee based on a percentage of the employee’s sales
Salespeople, real estate agents
Royalties
A percentage of actual sales that a licensee pays to a licensor, usually anywhere from 5 to 15 percent (authors, songwriters)
Estate tax
A tax on the estate, or total value of the money and property, of a person who has died
Overtime
Hours worked beyond 40 hours, paid at 1.5x rate
Gross pay
The total amount of an employee’s earnings before deductions are taken out
Medicare
A federal program of health insurance for persons 65 years of age and older
Associate’s Degree
2 year college degree from a community college, university, college, or technical school. The recipient of an Associate’s Degree can then transfer the credits toward a 4 year Bachelor’s Degree.
Master’s degree
An advanced 2-year program completed after attainment of a bachelor’s degree.
Student loans
Money borrowed to pay for education
FAFSA
Free Application for Federal Student Aid
Property tax
A tax on the value of a property
Tuition
A sum of money charged for teaching or instruction by a school, college, or university.
Taxes
Fees for the support of government required to be paid by people and businesses. Pays for things like roads, police, water fountains, welfare.
Public college
A college operated and financially supported by the state in which they are located.
Technical (vocational) colleges
Offer specialized training in a particular industry or career. Areas of study include the culinary arts, firefighting, dental hygiene, and medical-records technology. These colleges usually offer students certificates or associate degree programs.
1040
A tax form filled out by an individual and filed with the IRS that determines the amount of income tax owed in a single year.
Minimum wage
Lowest legal wage that can be paid to most workers
$7.25 national min. wage
As of January 1, 2025, Minnesota’s minimum wage will be $11.13 per hour for all employers, including small and large employers, youth, and J-1 visa workers. This is due to an adjustment for inflation.
Minneapolis/St. Paul is higher min. wage than the rest of the state.
Sales tax
A tax on a sale of merchandise or services
No sales tax on clothing in MN
Wage
An amount of money paid to an employee at a specific rate per hour worked.
Blue collar, hourly expression, can get overtime 1.5x compensation
Salary
A fixed amount of money paid to an employee for each pay period.
Annual sum expression, NO OVERTIME
Net pay
Amount of income left after taxes and deductions have been taken out.
Social security
(FDR) 1935, guaranteed retirement payments for enrolled workers beginning at age 65; set up federal-state system of unemployment insurance and care for dependent mothers and children, the handicapped, and public health
Human capital
The skills and knowledge gained by a worker through education and experience
University
A collection of colleges, has undergraduate programs which award bachelor degrees and graduate program for masters’ degrees and doctorates.
Bachelor’s Degree
4 year college degree from a university/college earned by completing undergraduate coursework and are awarded in specific concentrations.
Community college
Type of college with up to 2-year programs leading to certificates, diplomas, or associate degrees.
Annual Percentage Yield (APY)
The percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365-day period.
Collectibles
Items of personal interest to collectors that can increase in value in the future
Insurance
Protection against possible financial loss due to an accident or routine health visits.
Federal vs State Income Tax
Federal taxes fund the federal government
State taxes fund the government in your state - so the individuals who hold office in state governments decide where the taxes are used and how individuals are taxed.
Federal, state, and local taxes on income, both earned (salaries, wages, tips, commissions) and unearned (interest, dividends).
Private college
A college that relies on endowments, tuition and fundraising campaigns. They do not receive government money.
Special Focus Colleges
Some colleges focus on a specific interest or student population. Examples include: single gender colleges, religious colleges