Personal Finance Ch. 6

Total amount of money a worker earns in a pay period gross pay
Total amount of money a worker takes home in a pay period net pay
Another term for net pay is take-home pay
What is NOT the main purpose of taxation ? Retailing
Public programs such as nation defense, public schools, Social Security, and fire and police protection are all paid for through tax revenue
A sales tax is sent to the government by the merchant who sold the item
Real estate taxes are calculated based on the estimated value of the property
In general, which type of tax is typically used to fund local schools ? real estate
Federal income taxes, state taxes, and Social Security withholding’s are all payroll taxes
FICA refers to payroll taxes withheld for Social Security and Medicare
Which of the following would LEAST likely be included on an employee’s pay stub ? the employee’s total tax owed for the year
What is the government body that enforces federal tax laws and collects the taxes ? IRS
You would use a 1040 or a 1040EZ to file a tax return
Taxes are figured based on your earnings during which time period the calendar year
The deadline for filing your federal tax return each year is April 15th
A tax paid as part of the purchases price of an item sales tax
The total amount of money an individual takes home during a pay period net pay
Money for the government withheld from an individual’s paycheck tax
Any money collected by a government from its citizens for the purpose of operating the government payroll tax
the total amount of money an individual earns in a pay period gross pay
an annual report of all information related to your income taxes tax return
a tax paid to the government based on the value of the property an individual owns real estate tax
primarily used to fund local schools real estate taxes
include federal and state income taxes payroll taxes
a tax for which taxpayers often receive a separate bill real estate taxes
collected by merchants and sent to the government sales taxes
are not paid in the same way by people who are self employed payroll taxes
imposed by many states but not by the federal government sales taxes
include FICA payments payroll taxes
____ may be listed as OASDI (Old-Age, Survivors and Disability Insurance) Medicare and Social Security taxes
An employer matches employees’ contributions to ___ and sends the total amount to the government FICA taxes
What provides payments to eligible retirees and people with disabilities Social Security
Medicare is a government ____ program health insurance
In general, the more money a person earns, the ____ they must pay taxes higher the rate is at which
typically a tax of 6.20% of your salary Social Security
a tax of 1.45% of your salary Medicare
the amount of salary taxed is capped at a certain level Social Security
FICA tax both Social Security and Medicare
a government health insurance program Medicare
benefits for older Americans both Social Security and Medicare
Single, head of household, and married filing joint return are all examples of filing status
in general, your applicable tax rate and rules differ depending on which ____ you chose filing status
Most people are considered dependents of their parents or guardians by the IRS until they reach the age of 18
When your parent or guardian claims you as a dependent on a tax return, they are able to lower what they owe in taxes
The first step in determining the amount of federal tax you owe is calculating your gross income
Shortly after the end of the year, you will receive a ____ form summarizing all of your relevant income and tax withholding information from each employer you worked for during the year W2
AGI stands for adjusted gross income
A winner of any cash prize, such as those won in a lottery, or game show, totaling over $600 would be best advised to expect a pay about ____ of the prize in taxes 50%
What source of income would NOT be counted as part of an individual’s gross income ? child support payments reveived
The standard deduction is a fixed amount ___ are allowed to deduct from their ____ to reduce their tax liability all taxpayers; AGI
The amount of the standardizes deductions varies according to your ___ and whether you are over or under the age of 65 filing status
Which of the following would you currently LEAST likely be able to claim as an itemized deduction on your federal tax return money paid in rent
Accurate completion of your tax return will show whether you underpaid your taxes and need to pay additional income tax or if you overpaid and will receive a refund
When filing their tax returns, some low income families will receive more money back in the form of a ____ than was withheld from their paychecks earned income credit
figured by taking an individual’s total income and subtracting certain allowable amounts adjusted gross income
a fixed amount anyone is allowed to subtract from their AGI to reduce tax liability standard deduction
a specific expense that can be subtracted from an individual’s AGI to reduce tax liability itemized deduction
the total amount of a person’s income from almost any source gross income
the positive difference between what you sold an asset for and what you paid for it capital gain
Briefly explain the purpose of taxation run government, schools, services such as police, and fire department

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