Glossary Terms:

Preparing a 1040EZ Income Tax Form

Glossary terms from:
http://www.econedlink.org/e947


Budget

A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, covering a specific time period.

Expenses

Payments for goods and services.

Federal Budget

The taxing and spending plan of the national government.

Federal Income Tax

A tax paid by individuals and businesses to the federal government to fund such services as national defense, human services, and the monitoring and regulation of trade.

Gross Income

A total amount of money earned (from salaries, wages, etc.) before taxes and other deductions are withheld. Also known as gross pay.

Gross Pay

A total amount of money earned (from salaries, wages, etc.) before taxes and other deductions are withheld. Also known as gross income.

Housing

Accommodation in houses, apartments, etc.

Income

Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends.

Income Tax

Payments made by individuals and corporations to the federal government (and to some state and local governments) based on income received (both earned and unearned).

Interest

Money paid regularly, at a particular rate, for the use of borrowed money.

Job

A piece of work usually done on order at an agreed-upon rate. Also a paid position of regular employment.

Money

Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.

Net Pay

The amount of money a person receives within a pay period after taxes and other deductions are taken out of his or her paycheck.

Return

Earnings from an investment, usually expressed as an annual percentage.

Role of Government

Government activity in establishing a framework or rules of the game in economic life. In the United States, this activity involves preserving and fostering competition, regulating natural monopolies, providing information and services to enable the market to work better, regulating externalities, providing certain public goods, offering some economic security and income redistribution to individuals, assuring a sound monetary system and promoting overall economic stability and growth.

Savings

Money set aside for a future use that is held in easily-accessed accounts, such as savings accounts and certificates of deposit (CDs).

Savings Account

An interest-bearing account (passbook or statement) at a financial institution.

Services

Activities performed by people, firms or government agencies to satisfy economic wants.

Taxation

Taxation is the process in which a charge is imposed upon a taxpayer by a state or a legal equivalent of a state.

Taxes

Compulsory payments to governments by households and businesses.

W-2 Form

A federal income tax document that employers complete and send to their employees and to the Internal Revenue Service at the end of a year; shows employee compensation and taxes withheld.

Withholding

Money taken out of an employee's paycheck and sent to the government and credited to the employee's tax bill.