Taxes Vocabulary (Unit 8)

Tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities.

• Federal Income Tax

• Deductions

• Graduated Income Tax

• Withholding Allowance

Refers to an exemption that reduces how much income tax an employer deducts from an employee's paycheck.

• Deductions

• Federal Income Tax

• Withholding Allowance

•  FICA

An amount of money that you could deduct for yourself, and for each of your dependents, on your tax return.

• Withholding Allowance

• Personal Exemptions

• Federal Income Tax

• Deductions

Refers to a situation where tax rates change as you make more money.

• Personal Exemptions

• FICA

• Withholding Allowance

• Graduated Income Tax

Tax levied on both employers and employees. It amounts to a total of 6.2% of gross earnings.

• Net Pay

• Withholding Allowance

• Social Security

• Graduated Income Tax

Tax on wages that U.S. employers are liable to withhold from employees' paychecks. It amounts to a total of 1.45% of gross earnings.

• Medicare

• Graduated Income Tax

• Deductions

• Net Pay

The combination of the Social Security tax and the Medicare tax. It amounts to a total of 7.65% of gross earnings.

• Social Security

• FICA

• Federal Income Tax

• Graduated Income Tax

Offered by an employer or other large-scale entity, such an association or labor organization, to its workers or members.

• Withholding Allowance

• FICA

• Group Insurance

• Graduated Income Tax

The amount of money employees receive before any taxes and deductions are taken out.

• Social Security

• Federal Income Tax

• Net Pay

• Gross Income

The amount of money employees take home after all deductions have been taken out.

• Net Pay

• Social Security

• Federal Income Tax

• FICA