Unit 1 Review Flashcard Financial Math

Front

Who is likely to be the most impacted by a 1% increase in the sales tax rate?

Back

A person who makes $16,750 a year is likely to be the most impacted because they have a lower income and the tax increase represents a larger percentage of their income.

Front

What is the amount of money you're paid after all taxes and deductions are taken out of your paycheck called?

Back

Net pay.

Front

Which statement about deductions and credits is TRUE?

Back

You can get money back from a tax credit if your taxes owed are small enough.

Front

Who is responsible for providing the W2 form?

Back

Your Employer.

Front

How much of Ernesto's income would be subject to FICA taxes if he made $15,500 from his job, $500 in dividends, $3,500 driving for Uber, and $15 in interest?

Back

$19,000.

Front

What is the definition of gross pay?

Back

Gross pay is the total amount of money earned before any deductions or taxes are taken out.

Front

What is a tax deduction?

Back

A tax deduction reduces the amount of income that is subject to tax, thereby lowering the overall tax liability.

Front

What is a tax credit?

Back

A tax credit directly reduces the amount of tax owed, potentially resulting in a refund if the credit exceeds the tax liability.

Front

What does FICA stand for?

Back

FICA stands for the Federal Insurance Contributions Act, which is a U.S. law that mandates a payroll tax to fund Social Security and Medicare.

Front

What is the difference between net pay and gross pay?

Back

Net pay is the amount received after deductions, while gross pay is the total earnings before any deductions.