Business Algebra Unit 1

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1040

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Th standard IRS form that individuals can use to file their annual income tax returns

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1099

Back

Form that details all "non-employee" compensation, including for specific jobs like freelancers or contractors

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Audit

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An inspection of a filer's tax return by the IRS

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Capital Gain

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Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for

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Dependent

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Someone you financially support who can be "claimed" on a tax return to reduce your taxable income and lower your taxes

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Effective Tax Rate

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The actual rate you pay in your taxes, as a percentage of your overall income

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Exemption

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The set amount of money, per dependent, you can subtract from your taxable income

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Federal Insurance Contributions Act (FICA)

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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

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Filing Status

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A category that defines the type of tax return an individual will use, primarily based on marital status; it also determines the size of your tax brackets and how much of your income is taxed at each rate

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I-9

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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