Financial Definitions:

1. 1040 – Form 1040, U.S. Individual Income Tax Return – It is the basic form you file annually with the IRS.
2. Income Tax – It is the main source of revenue for the federal government and many states. The tax is based on your earned and unearned income.
3. Deductions – They are expenses allowed by the IRS that reduce your taxable income.
4. Dependent – Someone you support and who you can claim as an exemption.
5. Exemption – It is a deduction from taxable income for you, your spouse, and your qualifying dependents.
6. Payroll Tax – It is a tax based on wages, tips, and salaries paid. Part of the tax is deducted from the employee’s pay, and the rest is paid by the employer. Federal, state, and local governments collect payroll taxes for expenses such as social security, Medicare, unemployment compensation, worker’s compensation insurance, and local transit.
7. Wage – Money that is paid or received for work or services, as by the hour, day, or week.
8. Salary – It is a fixed compensation for services, paid to a person on a regular basis.
9. Social security -A program of old-age, unemployment, health, disability, and survivors insurance maintained by the U.S
10. Medicare – The federal insurance program that funds medical care for people age 65 and older and certain disabled people.
11. Gross pay – Amount before taxes or
    deductions, for this calculation.
12. Net pay – Is the remaining amount after deductions from the gross salary.

Our family has Ben for the dad. His age is 40. His job is a group manager /service advisor for a large metro Milwaukee GM dealership. his wage is 50,000 to 80,000 per year. Ashley is the mom. Her age is 39. Josh is the adopted son. His age is 18. Raymond is the other adopted son. His age is 15.

Ben – dad – 40
Ashley – mom – 39
Josh – adopted son -18
Raymond – son – 15