midterm - chapter 16 Flashcards Preview

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Flashcards in midterm - chapter 16 Deck (50):
1

tax used to pay fro healthcare for age 65+

medicare tax

2

tax based on the value of items received from a deceased person

inheritance tax

3

tax on personal income; a major source of revenue for federal and state governments

income tax

4

the difference between a person's assets and liabilities

assets - liabilities = _____

net worth

5

Why do we pay taxes?

to help finance government projects like roads, schools, libraries, police department, etc

6

form filled out by the employee so that the employer will withhold the correct federal income tax fromt he employee's paycheck

W-4 form

7

payments made by self-employed people and paid directly to the government quarterly

estimated payments

8

a financial statement that reports net wages and other income along with spending for a period, such as for a month

cash flow statement

9

actual spending is less than budgeted amount

budget surplus - spent less than budgeted so have extra money left over

10

What type of taxes are in 'taxes on wealth' category?

  • estate tax - based on person's property at death
  • inheritance tax - based on items received from deceased person
  • gift tax - tax on any property or cash received as a gift

11

a tax deduction for the taxpayer, a spouse, and each dependent (child)

exemption

12

costs that occur on a regular basis and are for the same amount each time

fixed expenses

13

shows personal assets, personal liabilities and a person's net worth/owner's equity

personal balance sheet

14

tax form that reports income and deductions to determine the amount of taxes owed or amount of refund

1040 form

15

tax based on the value of a person's property at death

estate tax

16

a charge imposed by a government to finance public services

tax

17

your expenditures; money spent on all needs and wants

cash outflows

ex. rent/mortgage, food, clothing, utilities, telephone, entertainment, etc

18

a state or local tax on goods and services that is collected by the seller

sales tax

19

due date to file your federal income tax return

april 15

20

What type of taxes are in 'taxes on earnings' category?

  • social security tax
  • income tax

21

What are the 5 characteristics of an effective budget?

  1. must be realistic
  2. should be flexible
  3. should be evaluated regularly
  4. must be well planned and clearly communicated
  5. should have a simple format

22

What type of taxes are in 'taxes on property' category?

  • real estate property tax - tax on land and buildings, helps pay for schools
  • personal property tax - tax on boats, cars and trucks

23

costs that differ each time and may not be as easy to estimate

variable expenses

24

What determines how much a person pays in taxes?

is related to where you live, how much money you earn and how you spend and save your money

25

tax based on the value of personal property such as boats, cars and trucks

personal property tax

26

examples of personal assets

  • money in bank - checking or savings
  • investments
  • furniture
  • clothing
  • automobiles
  • jewelry
  • rare coins
  • etc

27

What are the 6 purposes of a budget?

  1. Live within your income
  2. Make wise buying decisions
  3. Avoid credit problems
  4. Plan for financial emergencies
  5. Develop money management skills
  6. Achieve your financial goals

28

  • form provided by the employer to the employee
  • it reports wage and salary info for the employee as well as the amount of federal, state and other taxes withheld fromt he employee's paycheck

W-2 form

29

an amount that reduces your taxable income

tax deduction

30

tax based on immovable property - land and structures - that are permanently attached to the ground such as houses, buildings, barns, etc

real estate property tax

31

tax on gifts of any kind (property and money) when the value of the gift exceeds a certain dollar amount

gift tax

32

amount that reduces taxable income

tax deduction

ex. standard deduction or itemized deductions (medical expenses, property taxes, mortgage interest, etc)

33

any difference between actual spending and budgeted amount

budget variance

34

What type of taxes are in 'taxes on purchases' category?

  • sales tax - tax on everything you buy except food and clothing
  • excise tax - imposed on specific goods and services, ex. gas

35

total income - tax deductions = taxable income

taxable income x tax rate = ______

final taxes owed

36

a charge imposed by a government to finance public services

tax

37

  • the amount on which taxes are calculated
  • Gross Income - Tax Deductions = ______

taxable income

38

What are the 8 common budget categories?

  1. savings
  2. food
  3. clothing
  4. househoold
  5. transportation
  6. health and personal care
  7. recreation and education
  8. gifts and contributions

39

actual spending is greater than budgeted amount

budget deficit - spent more money then you were supposed to

40

US government agency that collects taxes and enforces the internal revenue laws

IRS - Internal Revenue Service

41

the day to day financial activities associated with using limited income to satisfy your unlimited needs and wants

money management

42

detailed plans for the financial needs of individuals, families and businesses; allows you to meet your personal goals with a system of saving and wise spending

budget

43

examples of personal liabilities

  • credit card balances
  • car loans
  • personal loans
  • home mortgage
  • etc

44

tax used to finance retirement and disability benefits

social security tax

45

What are the 4 major tax categories?

  • taxes on purchases
  • taxes on property
  • taxes on wealth
  • taxes on earnings

46

the money you have available to spend as a result of workign or from other income such as interest earned

cash inflows

ex. take home pay/net pay, interest income

47

determines the amount of tax a taxpayer is required to pay for a year

federal income tax return

48

a tax imposed on specific goods and services; built in to the price

excise tax

49

What are the 4 steps in a personal budget process?

  1. set financial goals
  2. plan budget categories
  3. maintain financial records
  4. evaluate your budget

50

a 'pay as you go' system in whcih an employer deducts income tax from the earnings of workers

withholding