Taxes and Income Vocabulary and Definitions

Capital gain is defined as:

• The profit from the sale of an asset or investment.

• The interest earned on a savings account.

• The amount of money borrowed from a bank.

• The total revenue of a company.

Withholding refers to:

• The amount deducted from an employee's wages for taxes

• The total salary paid to an employee

• The bonus given to an employee

• The net salary after all deductions

Compound interest is a method of calculating interest where the interest earned is added to the principal, so that the interest is calculated on the new total in subsequent periods.

• Simple interest

• Compound interest

• Fixed interest

• Variable interest

A Dividend in the context of a company's profits is:

• a portion of a company's earnings distributed to shareholders.

• a type of tax imposed on company profits.

• the total revenue generated by a company.

• the net profit after all expenses are deducted.

Define Exemption in terms of taxable income.

• An exemption is a portion of income that is not subject to tax.

• An exemption is a tax rate applied to all income.

• An exemption is a penalty for not paying taxes.

• An exemption is a tax credit for low-income earners.

The Gig economy is:

• a traditional employment model with long-term contracts

• a labor market characterized by short-term contracts or freelance work

• an economy based on agricultural and industrial sectors

• a system where employees work for a single employer for their entire career

The purpose of an I-9 form is to:

• Verify the identity and employment authorization of individuals hired for employment in the United States

• File taxes with the IRS

• Apply for a driver's license

• Register to vote

Human capital is defined as:

• The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.

• The physical assets owned by an organization or country.

• The financial resources available to an organization or country.

• The natural resources available to an organization or country.

A 1040 form is used for:

• Filing individual income tax returns in the United States

• Applying for a passport

• Registering a vehicle

• Enrolling in a university

Income tax is a tax levied on the ______ of individuals or businesses by the government.

• income

• property

• sales

• inheritance