20895022
Description
Flashcards by Andrea Falcon, updated more than 1 year ago
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| Question | Answer |
| Disposable income | income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes |
| Taxes | sum of money demanded by a government to support the government itself along with facilities and services |
| Progressive tax | one that charges a higher tax rate to people who earn a higher income |
| Regressive tax | a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners |
| Proportional tax | an income tax system where the same percentage of tax is levied on all taxpayers, regardless of their income |
| Taxable income | the amount of income used to calculate how much tax an individual or a company owes to the government in a given tax year |
| Tax credits | an amount of money that can be offset against a tax liability |
| Exemptions | a reduction or elimination of the taxes normally imposed on individuals and organizations by state and federal governments |
| Deductions | a deduction that lowers a person’s tax liability by lowering his taxable income |
| Itemized deductions | deductions that permit taxpayers who qualify to deduct more from their adjusted gross income (AGI) than they could using the standard deduction |
| Form W-4 | tells the employer the correct amount of tax to withhold from an employee's paycheck based on the employee's marital status, number of exemptions and dependents and other factors |
| Form W-2 | form that an employer must send to an employee and the Internal Revenue Service (IRS) at the end of the year and reports an employee's annual wages and the amount of taxes withheld from his or her paycheck |
| Form 1040 | form used by U.S. taxpayers to file an annual income tax return |
| Taxpayer | a person who pays a tax to national, state, county, or municipal governments |
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