Personal Finance test 2
Exemption
A person claimed as a dependent on a tax return.
dependent
A person who depends on you for more than half of his or her support.
Medicare tax
Health insurance, dental insurance, vision insurance, daycare spending account, 40lk plan, savings plan charities a tax that pays for medical care for retired people.
What government agnency handles taxes
IRS
Disposable income
Income remaining for a person to spend or save after all taxes have been paid
Social security tax
Income tax, social sercurity tax, medicare tax a withholding tax to provide old age surivors and disablitly tax.
In cash payments
Money in a form of check, debit card, or other direct payment given to a person needing assistance.
Payroll deduction
Money taken out of an employees paycheck.
If two people both make exaclty 40,000 a year will they have to pay the exact same amount of federal income tax?
No because 1 person will have to pay less if they have more dependence or other deductions to be paid claim.
sales tax
a consumption tax paid on the purchase of goods and services.
what is a profit sharing plan
a plan that gives employees a share in the profits of the company. Each employee receives a percentage of those profits based on the company's earnings.
regressive tax
a set flat percentage tax (favors high income earners).
progessive tax
a tax in which the rate increases as the payers income increases favors low income earners
Gift tax
a tax on any gift of more than 14,000 in a calender year
net pay
amount of money an employee takes home after taxes and other deductions have been subtracted from his or her earnings (also known as take home pay).
benefits
are forms of pay other than salary or wages paid time off personal or sick education perks insurance
what are perks list three examples
company car account
what are educational benefits why would a company give this type of benefit
company pays for higher education
form W-4
employees withholding allowance certificate the form that determines the amount of tax the employer will withhold from your paycheck.
list two examples of in kind payments
food stamps and rent subsides
How is gross pay different from net pay?
gross pay is before the deductions net pay is after the deductions.
list three optional paycheck deductions
health insurance, dental insurance, vision insurance
list an example of a progressive tax
income taxers
List five types of unearned income
interest income, divided income, captial gains and captial gain distributions.
transfer payments
interest, dividends, capital gains, gamblings, alimony,royalities, rent, buissness,social sercuirty, penisons, unemployment compensation.
entrepreneur
is someone who is self employed and owns a buissness
who normally gets paid a salary why
manger or people who are payed to complete a job are normally payed a salary.
Unearned income
money received from the sources other than working in a job ethier for yourself or for someone else.
why would an employee start at mnimum wage
new workers often begin at minimum wage because they dont have the education or experience to command a higher rate.
overtime pay
pay received for hours worked in addition to regular hours at least 1 1/2 times hourly wage
In kind payments
payments made indirectly on a persons behalf or paid in a form other than money to those in need.
List three required paycheck deductions
payroll deduciton, required deduction, optional deductions
what is a stock option plan
plan that gives employees the right to purchase a fixed number of shares of company stock at a specified price for a limited period of time
list two indirect benefits of paying taxes
public education for citizens, free vaccines
list two examples of wealth tax
real estate inheritance
gross pay
salary or wages, recieved before taxes and other deductions are taken off.
list an example of regressive tax
sales and prperty taxes
venture buissness
small buissness but the owner plans to grow it into a large buissness
lifestyle business
small buissness in which the owner plans to keep it small
list two examples of in cash payments
socail sercurity and unemployment compensation
list two direct benefits of paying taxes
social sercuity, police, national parks
wealth tax
tax on items of value that you own example real estate inheritance etc
capital gains tax
tax on the sale of any investment
property tax
tax paid based off the value of any type of real estate
Income tax
tax paid on all earned and unearned income.
form W-2
the form that reports an employees annual wages and the annual amount of taxes withheld from their paychecks.
form 1099
the form used to report various types of income other than wages, salaries and tips.
form 1-9
the form used to verify an emplyee is eligible to and the annual amount of taxes withheld from their paychecks.
minimum wage
the lowest pay rate allowed by law for each regular hour of work.
how does the amount of tax a person pays affect the persons disposable income?
the more tax you pay the lower your disposble income will be.
what is the overall purpose of filling a tax return
the purpose is to determine if you owe more tax or if you get a tax refund.
form 1040
the standard form that tax payers use to file their annul income tax return.
list the four main types of pay periods and list how often a worker is paid in each
weekly once a week Biweekly every two weeks semimonthly twice a month monthly once a month
list two advantages of owning your own buissness
you can set your own hours you have a say in how much you get paid
list two disadvantages of owning your own buissness
you could lose alot of money and you could work long hours you have to make all the decsions.
commission
you earn a percentage of the amount of sales you make.
piecework rate
you earn a set amount of each piece produced for each piece produced that exceeds the expected level of production.
hourly wage
you earn so much per hour worked
tips
you make money for providing a service for customers who then leave a tip.
salary
you recieve a fixed rate of pay for each pay period regardless of how many hours worked.