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Term | Definition |
---|---|
earned income | the income received from employment, including self-employment |
payroll deduction | a subtraction from gross pay. Payroll deductions can lower a paycheck by 20 percent or more |
net pay | gross pay (plus bonuses) minus payroll deductions |
tax returns | a report containing information used to calculate taxes owed by the taxpayer |
form w-2 | the Employee’s Withholding Certificate that helps an employer determine how much income tax to withhold from an employee’s paychecks as payroll deductions |
capital gains | when property, such as corporate stock, is sold for an amount greater than its cost |
tax liability | tax owed |
Examples of earned income | wages salary tips and commission |
Difference between a wage and a salary | wage hourly/ salary yearly |
Examples of employee benefit | Bonus, insurance, vacation (time off), sick leave, retirement, healthcare |
who has to file taxes | individuals and businesses (income must be a certain amount) |
Examples of filing statuses | single, married (jointly/separated), head of household, qualifying widow (er) |
5 steps to complete a tax return | personal information, income, standard deduction, tax liability, and signature |
Primary purpose of taxes | government's MAIN source of revenue for operations, facilities, and services |
3 government spending categories | mandatory, discretionary, and interest on debt |