Budgeting & Taxes Vocabulary
paycheck stub
A document that details your earnings and the amount withheld from your taxes, health insurance, retirement funds etc
W-4
A form completed by an employee to indicate his or her tax situation (exemptions, marital status, etc.) to the employer, who then withholds the corresponding amount of taxes from each paycheck
medicare
A government run insurance program that provides healthcare assistance to elderly and disabled Americans.
budget
A plan of your expected income and how you will use it to meet your expected expenses over a period of time
variable expenses
Cost that appears irregularly or that changes in amount (e.g., utility bills)
fixed expenses
Cost that can be expected at regular intervals and that remains the same amount (e.g., monthly rent payment)
Medicaid
Federal program that provides medical benefits for low-income persons/families
50-30-20 Budget Rule
Financial plan that allocates 50% to needs, 30% to wants, and 20% to savings and debt repayment
Zero-Based Budgeting
Financial plan where every anticipated earning is assigned a role to be spent, saved, or invested somewhere, so there's no "leftover" money with no purpose
Cash Envelope System
Financial plan where money for all variable spending is taken out in cash and placed in labeled envelopes by budget category and then spending occurs only from the envelopes
W-2
Form that an employer must send to an employee and the IRS at the end of the year to report the employee's annual wages and taxes withheld from their paycheck
1099
Form that details all "non-employee" compensation, including for specific jobs like freelancers or contractors
I-9
Form used by an employer to verify an employee's identity and to establish that the worker is eligible to accept employment in the United States
needs
Purchases a person must have to live or succeed or bills that must be paid to remain in good standing
income tax
Taxes paid by employees to federal & state government through a direct deduction from their paycheck
1040
The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns.
FICA
a federal law that requires an employer to withhold taxes from the wages they pay their employees; the funds go toward social security and medicare.
tax return
a form or forms filed with a tax authority that reports income, expenses and other pertinent tax information.
payroll tax
federal and state taxes that all employers must pay, based on a percentage of the employee's salary toward social services such as social security and medicare
Social Security
federal program of disability and retirement benefits that covers most working people
deduction
money taken from your paycheck to cover things like taxes and health insurance
Wants
non essential purchases a person wants to feel happy, make life convenient, fit in with peers, etc
dependent
someone you financially support who can be "claimed" on a tax return to reduce taxable income and lower your taxes.
gross pay
the amount of money you earn before taxes and other expenses (deductions) are taken out.
Net Pay
the amount of money you take home after taxes and other expenses (deductions) are taken out.
withholding
the portion of an employee's wages that is not included in their paycheck because it does directly to federal, state and local taxes
