Final Prep 2

Front

What is income tax?

Back

A tax collected by the federal government based on an individual's yearly earnings.

Front

What is property tax?

Back

A tax based on the value of owned property, typically assessed by local governments.

Front

What is sales tax?

Back

A tax imposed on the sale of goods and services, usually calculated as a percentage of the purchase price.

Front

What is the purpose of taxes?

Back

To fund government services and programs, including education, infrastructure, and public safety.

Front

What is a progressive tax system?

Back

A tax system where the tax rate increases as the taxable amount increases, meaning higher earners pay a larger percentage.

Front

What is a flat tax?

Back

A tax system with a single tax rate applied to all income levels.

Front

What is a tax deduction?

Back

An expense that can be subtracted from gross income to reduce the amount of taxable income.

Front

What is a tax credit?

Back

An amount that taxpayers can subtract directly from the taxes they owe, reducing their overall tax liability.

Front

What is the difference between gross income and net income?

Back

Gross income is the total income before any deductions, while net income is the income after deductions and taxes.

Front

What is a W-2 form?

Back

A form that employers send to employees and the IRS, detailing annual wages and the amount of taxes withheld.