Everfi Lesson 2: Taxes, Income and Employment
Associate's Degree
2 year college degree from a community college, university, college, or technical school
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
Bachelor's Degree
An academic degree which usually takes four years to earn and is awarded by a college or university
benefits
Compensation in forms other than direct payment (health insurance, paid time off, disability insurance, retirement plan)
personal allowances
Items or exemptions you can claim on your W-4 form that reduce the amount of tax taken out of your paycheck
health insurance
Provides money to pay for health care for illness or injury
Paid Time Off
a benefit that provides employees with pay for time when they are not working
gig economy
a flexible market that allows you to work short-term independent jobs
W-2
a form that tells you how much you've made and how much you've paid in taxes in the last year; you will use this to fill out your tax return
Sales Tax
a tax on purchases or services (not based on income)
standard deduction
an amount of money set by the IRS that is not taxed
filing status
describes your tax-filing group which is based on your marital status (single, married filing separately, married filing jointly)
taxable income
income on which tax must be paid; total income minus exemptions and deductions
taxes
money paid to the Federal, State, and Local governments for schools, parks, roads, emergency services, etc.
Deductions
money taken out of a paycheck to pay for employee benefits like insurance or retirement plans
FICA (Federal Insurance Contributions Act)
money that goes to Social Security and Medicare programs
disability insurance
money that replaces some of your lost income if you are injured or sick and can't work
routing number
nine digit bank code used in US on bottom left of checks used to identify the financial institution (bank)
withholding (tax withheld)
tax payments taken out of an employee's pay before he or she receives it
account number
the number that identifies a particular bank account
gross pay
the total amount of an employee's earnings before deductions are taken out
net pay
take home pay; the amount of a paycheck after all taxes and deductions have been taken out of your paycheck
W-4
A federal tax form filled out by an employee to indicate the amount that should be withheld from his/her paycheck for taxes.
retirement savings plan
an account into which employees contribute a portion of their earnings to save for their retirement; employers may match these contributions