Personal Finance final study guide

withholdings & deductions

• Withholdings increase net pay.
• money taken out of your paycheck

• Deductions are added to gross pay.
• Withholdings are optional for employees.

difference between hourly wage & salaried employees

• Hourly wage employees are paid per hour worked, while salaried employees receive a fixed salary regardless of hours worked.
• Hourly wage employees receive a fixed salary based on performance.
• Hourly wage employees do not receive benefits, while salaried employees do.
• Salaried employees are paid per hour worked, similar to hourly employees.

tax returns & how long they should be kept

• Keep tax returns indefinitely.
• Keep tax returns for five years.
• Keep tax returns for one year.
• a document filed with a tax authority that reports income, expenses, and other relevant financial information and should return for seven years.

how much people pay in taxes

• The amount people pay in taxes varies significantly based on income, location, and tax regulations.
• People do not pay taxes if they earn below a certain amount.
• Taxes are only paid by businesses, not individuals.
• Everyone pays the same flat tax rate.

sales tax

• Sales tax is a fee paid directly to the manufacturer.
• Sales tax is only applicable to online purchases.
• Sales tax is a fixed amount deducted from the sale price.
• Sales tax is a percentage of the sale price added to the cost of goods and services.

income tax

• Income tax is a tax on capital gains.
• a type of tax governments impose on the income that businesses and individuals generate

• Income tax is a tax on sales.
• Income tax is a tax on property.

excise taxes

• Excise taxes are a type of income tax.
• Excise taxes apply to all goods and services equally.
• Excise taxes are taxes on specific goods and services.
• Excise taxes are only levied on luxury items.

inheritance tax

• A tax on gifts given during a lifetime
• A tax on property sales
• a tax paid by a person who inherits money or property of a person who has died

• A tax on income earned during a lifetime

who gets tax money

• Individuals are the primary recipients of tax money
• Businesses receive tax money
• Governments (local, state, and federal) get tax money.
• Charities collect tax money

how to do your taxes

• Ignore all forms and documents
• Only file if you owe money
• Gather documents, choose a filing method, fill out forms, review, and file.
• Estimate your taxes based on last year's income