Exam (elaborations)
Personal Finance- Taxes Questions and Answers
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Personal Finance- Taxes
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Personal Finance- TaxesExcise tax - answertaxes paid when purchases are made on a specific good, such as
gasoline. Usually included in the price of the product
AGI - answerAdjusted gross income
FICA - answerFederal insurance contributions act- includes Medicare and social
security
Medicare - answerHealth care for the aged- 1.45% of gross income
Social security - answer6.2% of gross income-any government system that provides
monetary assistance to people with an inadequate or no income.
Wages vs. salary - answerWages are payment by the hour and salaries are a set
amount of income
Gross pay vs. net pay - answerGross pay is how much you should get but net pay is
what you actually get after taxes and deductions
Earned vs. unearned income - answerEarned is what you get from working and
unearned is income for investments/savings account/lottery/etc.
W-2 - answerThe form that an employer must send to an employee and the IRS at the
end of the year. It tells an employee's annual wages and the amount of taxes withheld
from his or her paycheck.
W-4 - answerA form completed by an employee to indicate his or her tax situation
(exemptions, status, etc.) to the employer. The form tells the employer the correct
amount of tax to withhold from an employee's paycheck.
Income - answermoney received, esp. on a regular basis, for work or through
investments.
IRS - answerInternal Revenue Service- responsible for collection and enforcement of
taxes
Taxes - answera sum of money demanded by a government for its support or for
specific facilities or services, levied upon incomes, property, sales, etc.
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