Hr Block Vocab Ch 1-6 Exam Questions With
Solutions
Exemption An amount ($4,050 for 2017) allowed by law as a reduction of income that
would otherwise be taxed. See also Personal and Dependency Exemptions.
Federal Income Tax Withheld the amount taken out of income by the payer and submitted
...
Hr Block Vocab Ch 1-6 Exam Questions With
Solutions
Exemption An amount ($4,050 for 2017) allowed by law as a reduction of income that
would otherwise be taxed. See also Personal and Dependency Exemptions.
Federal Income Tax Withheld the amount taken out of income by the payer and submitted
to the IRS as an advance payment of the taxpayer's federal income tax.
Gross Income Total worldwide income received in the form of money, property, or
services that is subject to tax.
Income The word "income," in its broad sense, is the gain derived from capital, labor, or a
combination of the two. It is distinguishable from the capital itself. Ordinarily, for income tax
purposes, the word "income" is not used alone. Rather it is used within such descriptive terms as
gross income,taxable income, and adjusted gross income, all of which are defined elsewhere in
this glossary.
Medicare Part A Medicare insurance for qualifying individuals who are age 65 or older or
disabled. Medicare Part A covers hospital expenses, care in a skilled nursing facility, hospice
, Hr Block Vocab Ch 1-6 Exam Questions With
Solutions
care, and some health care. Most participants do not pay a monthly premium for this coverage if
they or their spouse paid medicare taxes while working.
Social Security Tax Withheld The employee's share of social security tax that was taken
out of the employee's pay and submitted along with the employer's share to the IRS by the
employer. The employee pays 6.2% and the employer pays 6.2% of the first $127,200 of the
employee's gross wages (for 2017).
Social Security Wages Total wages paid to an employee that are subject to this tax. This
amount does not include tips. Wages are also subject to medicare tax.
Tax Liability The amount of total tax due to the IRS after any credits and before taking
into account any advance payments (withholding, estimated payments, etc.) made by the
taxpayer.
Taxable Income Adjusted gross income, less itemized deductions or the standard
deduction, less allowable personal and dependent exemption amounts. This term is also used to
refer to income that is not exempt or excluded from taxation. For example, "Wages are taxable
income, but gifts are not."
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