Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
15 Cards in this Set
- Front
- Back
|
Adjusted Gross Income (AGI)
|
Adjusted gross income equals gross income less reductions that are allowable, regardless of whether personal deductions are itemized. On the 2010 tax forms, AGI is entered on line 4, Form 1040EZ; line 21, Form 1040A; and line 37, Form 1040.
|
|
|
Credits
|
Reductions of tax liability allowed for various purposes to taxpayers who meet the qualifications. Some credits are refundable; that is, the IRS will send the taxpayer a refund for any amount in excess of the tax liability. Some credits are nonrefundable; that is, they can only reduce tax liability to zero. Some credits may be carried to other tax year.
|
|
|
Earned Income
|
Income from personal services as distinguished from income generated by property or other sources. Earned income includes all amounts received as wages, tips, bonuses, other employee compensation, and self-employment income, whether in the form of money, services, or property.
|
|
|
Exemption
|
An amount ($3,650 for 2010) allowed by law as a reduction of income that would otherwise be taxed. (See also Personal and Dependency Exemptions.)
|
|
|
Federal Income Tax Withheld
|
The amount taken out of income by the payer and submitted to the IRS as an advance payment of the taxpayer's federal income tax.
|
|
|
Gross Income
|
Total worldwide income received in the form of money, property, or services that is subject to tax.
|
|
|
Wages
|
A wage is compensation or income, usually financial, received by worker in the exchange for their work.
|
|
|
Income
|
The work "income", in its broad sense, is the gain derived rom capital, labor, or a combination of the two. It is distinguishable from the capital itself. Ordinarily, for income tax purposes, the word "income" is not used alone. Rather it is used within such descriptive terms as gross income, taxable income, and adjusted gross income.
|
|
|
Medicare Part A
|
The medicare tax taken out of an employee's wages, or the same tax paid by a self-employed person on net self-employment income. The medicare A tax ratee is 1.45% of gross wages (2.9% for self-employed individuals).
|
|
|
Social Security Tax Withheld
|
The employee's share of social security tax that was taken out of the employee's pay and submitted along with the employer's share to the IRS by the employer. Both the empoyee and the employer pay 6.2% of the first $106,800 of the empoyee's gross wages (for 2010).
|
|
|
Social Security Wages
|
Total wages paid to an employee that are subject to this tax. This amount does not include tips. Wages are also subject to medicare tax.
|
|
|
Tax Liability
|
The amount of total tax due the IRS after any credits and before taking into account any advance payments (withholding, estimated, payments, etc.) made by the taxpayer.
|
|
|
Taxable Income
|
Adjusted gross income les itemized deductions or the standard deduction, less allowable personal and dependent exemption amounts. This term is also used to refer to income that is not exempt or excluded from taxation. For example, "Wages are taxable income, but gifts are not."
|
|
|
Unearned Income
|
Taxable income other than that received for services performed (earned income). Unearned income includes money received for the investment of moey or other property, such as interest, dividends, and royalties. It also includes pensions, alimony, unemployment compensation, and other income that is not earned.
|
|
|
Gifts
|
Property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
|
