Unit 4 Flashcards
Why do we have a test today? :(
Wages
a fixed amount of money paid to an employee on a regular basis such as weekly, bi-weekly or monthly
Salaried
an employee is paid a set amount for a specific period of time (weekly/monthly/annually, etc) regardless of the number of hours they work; sometimes this type of position is referred to as “exempt” because this type of position does not regularly pay overtime
Hourly
employee is paid a set rate according to the number of hours they work; some employers will refer to this type of position as “nonexempt” because hourly employees qualify for overtime rate increases
Commision
a fee that a salesperson receives upon completion of a sale
Freelance
a self-employed individual not usually connected with an employer
Apprenticeship
a position in which someone learns an art, trade, or job from someone else
Undergraduate degree
A bachelor’s degree
Graduate Degree
A Masters or doctorate degree
Professional License and Certification
a regulated and official process for ensuring individuals meet the necessary skills and knowledge for a particular job or field
Tuition
the sum of money charged at an institution for instruction; it is not the only cost for attendance (sticker price for an education)
GI Bill
GI Bill benefits help you pay for college, graduate school, and training programs. Since 1944, the GI Bill has helped qualifying Veterans and their family members get money to cover all or some of the costs for school or training.
Gap Year
a year taken between high school and college to pursue career-related training or experience
Student Loans
If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government, from private sources such as a bank or financial institution, or from other organizations. Loans made by the federal government, called federal student loans, usually have more benefits than loans from banks or other private sources.
Scholarships
based on achievements and help pay for educational expenses, some scholarships may have specific requirements of how the money may be applied such as toward tuition only
Grants
a tax-exempt financial aid that may be given for many purposes, not necessarily for education
Co-signing loans
puts the consignor equally responsible for paying back debt under the credit terms
Fellowships
a merit-based scholarship for advanced education in a specific field; many are competitive, but can help fund advanced degrees and requirements vary widely
Economic Sustainability
college degree holders are less likely to be unemployed and are more likely to have a higher earning potential
Economic Mobility
holding a college degree can offer many the opportunity to make more than earlier generations of their family
Trends in the workplace since 2020
many employers have begun to focus on the well-being of their employees, employers are also more willing to address social issues, Remote and hybrid work has increased in white collar fields , Many employers hold a favorable bias toward in-office employees when hybrid work is an option , Concerns over employee flexibility in not just location, but time will continue to be a debate
Education Options
college/university, Trade school, Technical school, Military, Work
General Career Option Categories
Military, Corporate business, Non-profit, Service industry, Manufacturing industry, Tech Industry, Academia, Research, Entrepreneurship, Fortune 500, Public Service, Skilled labor, Unskilled labor
In-state tuition vs. Out of state tuition
public institutions offer lower tuition rates for in-state students; individual states have different requirements to prove residency in-state
Vocational Training Programs
the entire cost is generally the same as the average cost of one year of college expenses; it usually takes less time to complete this course of study, getting attendees into the workforce sooner
Community College
these institutions have some of the lowest tuition costs and many students are able to live from home while attending, saving additional money
Tuition and Fees
these college-related costs are standard for all students attending an institution (with a few exceptions); tuition rates vary widely
Books/Supplies
these costs add up and the average expense is over $1200/year; buying used books, comparison shopping, and borrowing books can save you money
Housing
the cost of living arrangements vary considerably; on campus housing is usually a more expensive option for housing, but is more convenient. Some colleges will require new students to live on campus unless they live within a certain radius of a school. Renting an apartment can be less expensive, but comes with more work. Living at home is the cheapest option.
Campus Meal Plans
colleges offer meal plans to full and part time students who live on and off campus; the price per meal is relatively expensive compared to carefully budgeting your food expenses and cooking yourself; many offer different dining options
Return on Investment
as a general guideline your monthly loan repayment should be around 10-15% of your expected income at the time you are expected to begin repayment on your loan
529 College Savings Plan
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
529 Prepaid tuition plan
Prepaid tuition plans allow parents, grandparents and others to prepay tuition at today’s tuition rates at eligible public and private colleges or universities, helping them manage future tuition costs.
Education Savings account
often a supplement plan; this program allows savings for educational expenses from kindergarten through college; savings are tax-deferred as long as finds goto educational expenses
Uniform Gifts to Minors Act
allows money and financial securities to be transferred to minors through a UGMA account and is allowed in all states. The donor or a custodian manages the property for the minor’s benefit until the minor reaches a certain age.
Roth Individual Retirement Account
families can use their Roth IRA’s to save additional money for college; these can count as income when taken out for college and could alter financial aid packages or eligibility and the limit on contributions is low for this type of savings
AP
a highly rigorous course, students take the annual Advanced Placement Exam which determines if students will be awarded college credits; different colleges have different policies on required scores on these exams to count toward college requirements; the cost is much lower that the tuition for these credits in college and these courses look good on a college application due to their rigor
IB
students commit to taking a minimum number of courses for the diploma distinction and credit is granted by universities based on exam scores; these programs tend to be smaller than AP and are not as common throughout the country
Early College
students can earn an associates and high school diploma in 4-5 years; costs are covered for tuition, expenses, and textbooks provided guidelines are followed; offer preferential admission to state colleges and universities, dependent on GPA
Dual Enrollment
courses that grant high school and college credit; many of the courses taken at MCC are considered this
Transfer Process
Early College students will not apply to college as a transfer; some students can find their college is not a good fit for them, do not feel their program is strong enough, or were rejected from their first choice school; each college has a different process, so do your research and keep deadlines in mind; you will need recommendations from your college professors and keep costs in mind
Free Application for Federal Student Aid (FAFSA)
this form determines eligibility for post-secondary financial aid; some scholarships may require you to complete this form for disbursement of funds (especially federal and state-sponsored scholarships and awards)
Scholarships vs. Loans
scholarships are awards that do not need to be repaid, they are based on achievements and help pay for educational expenses, some scholarships may have specific requirements of how the money may be applied such as toward tuition only; loans require repayment
Federal subsidized loans
a need-based loan from the federal government; the interest is paid by the government while a student is enrolled, during grace periods, and deferment periods
Internships
sometimes internships offer stipends or payment which help offset expenses; they offer on-the-job training and allow for individuals to be mentored and make connections with people in the job field
Grants
a tax-exempt financial aid that may be given for many purposes, not necessarily for education
Fellowships
a merit-based scholarship for advanced education in a specific field; many are competitive, but can help fund advanced degrees and requirements vary widely
Full/Part-time work
this income can help to pay for expenses
Student Work Study
a federal program that provides part time employment opportunities to students with financial need, allowing them to help pay educational expenses
Consolidating Loans
combining a number of financial accounts or funds into a single overall account or set of accounts
Earned Income
taxable wages from working for someone else
Net Income
your take home pay after all deductions
Adjusted Gross Income
gross income after calculating certain reductions known as adjustments
Paychecks
wages or salary statement
Self-Employment
someone who earns their income through independent economic activity (as opposed to through an employer)
“Gig” Economy
flexible, temporary, or freelance jobs; now this is often done through online platforms
Passive Income
regular earnings from a source other than an employer or contractor
Capital Gains
the increase in a capital asset’s value and is realized when the asset is sold (sale price-initial cost)
Entitlements
a relationship between an individual (e.g. leasor) and a regular flow of income or asset
Side Hustle
a secondary business or job that brings in additional income
Investments
assets purchased with the goal of providing additional income from the asset itself but with the risk of loss
Equity
the value of an asset after liabilities are deducted from it (value-unpaid debt on purchase)
Dividend
the share of profits distributed in cash
Rentals
an example of an entitlement
Pre-tax deductions
lower an individual’s taxable income
Post-tax deductions
these are deducted from an individual’s net income; they do not lower an individual’s tax responsibility directly
Gross income
your pay before deductions
Federal Insurance Contributions Act (FICA)
this includes Social Security and Medicare Taxes
Medicare/Medicaid
up to a certain amount is subject to this tax and is taxed at a 1.45% rate (this is included in FICA)
Social Security
up to a certain amount is subject to this tax and is taxed at a 6.2% rate (this is included in FICA
401K
retirement savings plan funded by deductions from your paycheck
403B
a retirement savings plan for those employed by a tax-exempt institution (hospitals and nonprofits)
529
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs; individuals can elect to have a direct deduction from their payroll
Pensions
employee benefit that requires an employer to make regular contributions to a pool of money meant to fund eligible employees during retirement; many employers offer “matching programs” where employees are eligible for higher payouts in retirement through larger contributions while employed; these are deducted from paychecks
Health Insurance
these are deducted directly if you elect this benefit from your employer/it is offered; this is usually a percentage of costs or set amount taken from each pay cycle
Federal income tax
federal income taxes are assessed using a graduated system; taxpayers fall in brackets based on their adjusted income and pay at the rate of their bracket; higher brackets pay higher rates of income tax
State income tax
North Carolina assesses a flat rate income tax
Retirement accounts
other types of retirement accounts are also usually deducted directly from your paycheck
Roth & Traditional Individual Retirement Account (IRA)
a special account in which a person saves a portion of their income for retirement (traditional can sometimes be tax-deductible, Roth’s are not tax-deductible)
Flexible Savings Account for Healthcare
an elected pre-tax deduction for eligible healthcare expenses; if you don’t use it, you lose it at the end of the calendar year; shields income from taxes
Flexible Savings account for childcare
an elected pre-tax deduction taken from your paycheck; cannot be combined with childcare credits on taxes which usually benefit most families more than this program
Union dues
dues are usually taken out either as a straight fee or percentage of your income for union members that is paid to the union
Deductions vs. exemptions
deductions are items you can claim to reduce tax liability but exemptions are people you claim to reduce tax liability
W-4 form
federal tax form you complete at the start of employment that claims your allowances for payroll taxes
Income tax
a tax on earned and unearned income; this is paid annually to the federal and state governments
federal taxes
federal income taxes are assessed using a graduated system; taxpayers fall in brackets based on their adjusted income and pay at the rate of their bracket; higher brackets pay higher rates of income tax; tariffs and excise taxes are also collected, but are not directly seen by consumers because they are included in their price
State taxes
North Carolina assesses a flat rate income tax and collects sales tax; there are other taxes that are collected but these are two of the larger revenue pools
payroll tax
a tax on earned income that is applied to your income taxes
Capital gains taxes
taxes owed on the sale of an asset (sale price-initial cost); the rate varies considerably depending on your income
Estate Taxes
a tax on the right to transfer property upon your death when it is transferred to an heir; this is taken from the estate whereas an inheritance tax is deducted when it is transferred to an heir
Property Taxes
a tax on property such as land, buildings (including homes), and automobiles; these are aid to local or state governments
Local Taxes
localities charge taxes as well on property and charge sales tax; some cities may also levy taxes to pay for city services
Sales Taxes
a tax on purchased goods and services; these are collected by state and local governments (counties and cities/towns) for most purchases
Excise taxes
taxes collected from the seller or retailer; they often remain hidden in the price of the product or service, rather than being listed separately
Inheritance/gift taxes
this is only incurred at the federal level in North Carolina and over $11.7 million dollars (although this is subject to change); gifts can be taxed and when given sometimes a deduction on taxes although this is more complicated
Expenditures
special provisions of the tax code such as exclusions, deductions, deferrals, credits, and tax rates that benefit specific activities or groups of taxpayers.
Entertainment taxes
sometimes referred to as “amusement tax” is any tax levied on any form of commercial entertainment
Luxury taxes
a sales tax or surcharge levied only on certain products or services that are deemed non-essential or accessible only to the super-wealthy
Corporation taxes
a tax on the profits of a corporation
Wealth taxes
imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities
Budgets
Every year, Congress begins work on a federal budget for the next fiscal year. The federal government’s fiscal year runs from October 1 of one calendar year through September 30 of the next. The president submits his budget proposal to Congress early the next year.
Federal agency funding/discretionary spending
the area Congress sets annually. Discretionary spending typically accounts for around a third of all funding.
Deficit
when expenses exceed revenue and indicate the financial health of a country. The government generally uses the term budget deficit when referring to spending rather than businesses or individuals. Accrued deficits form national debt.
National Debt
the level of federal debt owed to creditors, which includes debt held by the public and intragovernmental debt.
1040
this is the long form of income taxes; people who qualify for the simplified forms often find additional tax benefits in completing this form; anyone with an income over $100,000, interest and dividends over a set limit, self-employed individuals, or income from property sales must complete this form otherwise you can complete a 1040A
NC-40
North Carolina’s state income tax form
W-2
an annual statement of earnings and payroll deductions used to complete income taxes
W-4
federal tax form you complete at the start of employment that claims your allowances for payroll taxes
1099
provides a statement of income not from an employer for such income over $600
1099-INT
provided a statement of interest earned on investments and savings, which is added to your income
1098-E
provides a summary of interest paid on student loans, which can be deducted from your adjusted income
1098-INT
provides a statement of interest paid on a mortgage, which can be deducted from your income (property taxed can also used as a deduction on federal income taxes)
Tax credit
the amount of money that can be directly subtracted from the taxes your owe
Allowance
an adjustment to the tax withheld from your paycheck such as marital status and number of dependents
Exemptions
a deduction from adjusted gross income for the taxpayer, the spouse, and qualified dependents
