Federal Taxes

Tax Withholding

• withhold or deduct tax from the payment, and pay that tax to the government. In most jurisdictions, withholding tax applies to employment income.
• For example: let's say Johns salary is $24,000 a year.He makes $2,000 a month, he only brings home, say $1,800 because his employer takes $200 out of his paycheck and remits it to the state and the federal government on his behalf. The payments go toward Johns federal income tax, state income tax, unemployment, and Medicare liabilities.

Tax Return

• a form on which a taxpayer makes an annual statement of income and personal circumstances used by the tax authorities to assess liability for tax.
• Due date is April, 15
• For example: Alaska gets 2,000+ every tax return.

Taxable Income

• is the amount of income that is used to calculate an individual's or a companys income tax due.

Deductions

• reduction of income that is able to be taxed and is commonly a result of expenses particularly those incurred to produce additional income.
• For those that make more the % goes up and pay more tax.
• For example: When you are rich you pay more and when you are poor you pay less for the government

Personal Exemptions

• freeing or state of being free from an obligation or liability imposed on others.

Social Security

• government system that provides monetary assistance to people with an inadequate or no income.

Medicare

• federal health insurance program for people who are 65 or older

Medicaid

• a U.S. government program, financed by federal, state, and local funds, of hospitalization and medical insurance for persons of all ages within certain income limits like 65.

Unemployment Tax

• original legislation that allows the federal government to tax businesses with employees for the purpose of collecting revenue that is then allocated to state unemployment agencies and paid to unemployed workers who are eligible to claim unemployment insurance.

Estate Tax

• tax levied on the net value of the estate of a deceased person before distribution to the heirs.
• For example: when you buy a house you pay tax on the area its on as well.

Gift Tax

• tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return.

Tariffs

• a tax or duty to be paid on a particular class of imports or exports.
• For example all the imported goods from all over and we get taxed for it.

Tax incentive

• is an aspect of a countrys tax code designed to incentive or encourage a particular economic activity.
• For example: Tabacco companies even though its bad for you government still wants you to smoke.