Financial Literacy Vocabulary

__________ is an employee’s pay before any paycheck deductions are taken out.

• net pay

• net worth

• gross pay

• principal

________________ is an amount of an employee’s gross pay that the employer sends to the federal government as partial payment of the employee’s yearly income tax.

• federal withholding

• net pay

• gross pay

• principal

What percent of an employee's gross pay is deducted for Medicare tax?

• 1.45%

• 6.2%

• 8.25%

• 10%

________ is the amount of money that remains (to take home) after all deductions are taken from gross pay.

• gross pay

• sales tax

• federal withholding

• net pay

________ is a percent of the cost of an item, which is charged by the city, local, and state governments to raise money.

• Medicare tax

• sales tax

• Social Security tax

• compound interest

___________________ are amounts subtracted from an employee’s gross pay by an employer for federal income taxes, Social Security tax, Medicare taxes, retirement savings, etc.

• paycheck deductions

• gross pay

• net pay

• rebate

__________________ are amounts subtracted from an employee’s taxable income prior to calculating the federal taxes owed.

• budget

• principal

• income tax deductions

• net pay

__________________ I = Prt

a fixed percent of the principal invested.

• compound interest

• unit price

• simple interest

• net worth

______________ A = P(1+r)^t

a fixed percent of the principal invested.

• rebate

• sales tax

• simple interest

• compound interest

What percent of an employee's gross pay is deducted for Social Security tax?

• 1.45%

• 6.2%

• 8.25%

• 10%