Taxes Vocabulary

What is a form that details all 'non-employee' compensation, including for specific jobs like freelancers or contractors?

• W-2 Form

• 1099 Form

• W-4 Form

• I-9 Form

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

• Audit

• Review

• Assessment

• Examination

The profit from the sale of an asset, such as a stock or a bond, is calculated by subtracting the price you initially paid from the price you then sold it for. What is this called?

• Capital Gain

• Net Income

• Gross Profit

• Revenue

Who is someone you financially support who can be 'claimed' on a tax return to reduce your taxable income and lower your taxes?

• A dependent

• A creditor

• A business partner

• A landlord

What is spending by the federal government determined by legislative action and approved through votes by elected officials called?

• Mandatory spending

• Discretionary spending

• Entitlement spending

• Capital spending

What is money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis, called?

• Dividend

• Interest

• Capital Gain

• Revenue

What is any income (wages/salary) that is generated by working called?

• Passive Income

• Earned Income

• Investment Income

• Rental Income

What is the definition of 'Effective Tax Rate'?

• The average rate at which an individual or corporation is taxed.

• The highest rate at which an individual or corporation is taxed.

• The total amount of taxes paid divided by total income.

• The rate at which the last dollar of income is taxed.

The term 'Exemption' refers to:

• A mandatory requirement

• A waiver from a rule or obligation

• An additional charge

• A type of penalty

The Federal Insurance Contributions Act (FICA) entails:

• A tax that funds Social Security and Medicare programs

• A federal insurance program for unemployment benefits

• A state-level health insurance initiative

• A retirement savings plan for federal employees