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Questions and Answers
What does Federal Income Tax (FIT) refer to?
What does Federal Income Tax (FIT) refer to?
What are Personal Exemptions/Withholding Allowances based on?
What are Personal Exemptions/Withholding Allowances based on?
Number of people an employee supports
The formula for Taxable Wages is: Taxable Wages = Annual Gross Pay - ______
The formula for Taxable Wages is: Taxable Wages = Annual Gross Pay - ______
Personal Exemptions
The Annual Tax Withheld formula is: Annual Tax Withheld = Taxable Wages x ______
The Annual Tax Withheld formula is: Annual Tax Withheld = Taxable Wages x ______
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Graduated Income Tax has a flat tax rate for all income levels.
Graduated Income Tax has a flat tax rate for all income levels.
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The Tax Withheld per Pay Period formula is: Tax Withheld per Pay Period = Annual Tax Withheld / ______
The Tax Withheld per Pay Period formula is: Tax Withheld per Pay Period = Annual Tax Withheld / ______
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What is Social Security in terms of payroll deduction?
What is Social Security in terms of payroll deduction?
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What percentage is Medicare paid on all earned money?
What percentage is Medicare paid on all earned money?
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The Tax Withheld equation is: Tax Withheld = Gross Pay x ______
The Tax Withheld equation is: Tax Withheld = Gross Pay x ______
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What is Group Insurance?
What is Group Insurance?
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The Deduction per Pay Period formula is: Deduction per Pay Period = Total amount paid by employee / ______
The Deduction per Pay Period formula is: Deduction per Pay Period = Total amount paid by employee / ______
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What is Net Pay?
What is Net Pay?
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The formula for Net Pay is: Net Pay = Gross Pay - ______
The formula for Net Pay is: Net Pay = Gross Pay - ______
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Study Notes
Federal Income Tax (FIT)
- Money withheld by employers from employee paychecks to cover federal taxes.
Personal Exemptions/Withholding Allowances
- Represents the number of dependents supported by an employee, impacting tax calculations.
Taxable Wages Formula
- Taxable Wages are calculated as Annual Gross Pay minus Personal Exemptions.
Annual Tax Withheld Formula
- Annual Tax Withheld is derived from multiplying Taxable Wages by the applicable Tax Rate.
Graduated Income Tax
- A tax system where rates increase with varying income levels, ensuring higher incomes are taxed at higher rates.
Tax Withheld Formula
- The amount of tax withheld each pay period is determined by dividing the Annual Tax Withheld by the number of pay periods per year.
Social Security
- A deduction applied to the first $84,900 of income, set at a rate of 6.2%.
Medicare
- A tax levied on all income earned, at a rate of 1.45%.
Tax Withheld Equation
- The amount of tax withheld can also be calculated by multiplying Gross Pay by the Tax Rate.
Group Insurance
- Offers lower premiums compared to purchasing individual insurance plans.
Deduction Formula
- Deductions per pay period are calculated by dividing the total employee contributions by the number of pay periods per year.
Net Pay
- The remaining amount after all tax withholdings and personal exemptions are subtracted from Gross Pay.
Net Pay Formula
- Net Pay is determined by subtracting Total Deductions from Gross Pay.
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Description
Test your knowledge on federal income tax concepts with these flashcards from Finance Chapter 2. Explore key definitions, formulas, and allowances related to net income and taxable wages. Perfect for students looking to reinforce their understanding of tax processes.
