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Words To Know

Vocabulary - Do It Yourself

401k

A provision for retirement savings that enables an employee to invest a percentage of (pre-tax) income, often matched by the employer, into an account where it will not be taxed until withdrawn, withdrawals before a specified date typically incurring a penalty; (also) an account of this type.

Business Expenses

Expenses incurred relating to operating your own business such as office supplies and equipment.

Catastrophic Insurance

Coverage for specific catastrophic events such as death, fire, flood, and some medical conditions.

Certified Financial Planner

A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. They are specialized in tax planning, asset allocation, risk management, retirement and/or estate planning.

Estimated Taxes

The required advance payment of a current liability that is not already being withheld for, such as investment income, capital gains, alimony, or rent.

Freelancer

A person who makes himself or herself available to be engaged for work on particular assignments or projects, rather than being engaged on a long-term or permanent basis by a single employer.

Health Insurance

Covers specific medical costs associated with illness, injury, and disability.

Income Tax Deduction

An amount subtracted from an individual's adjusted gross income to reduce the amount of taxable income.

Self-employed

A person who makes himself or herself available to be engaged for work on particular assignments or projects, rather than being engaged on a long-term or permanent basis by a single employer.

Stock

An investment that represents shares of ownership of the assets and earnings of a corporation.

Tax

A government fee on business and individual income, activities, or products.

Federal Withholding

In the United States income tax system, employers are required to withhold a portion of each employee's income and pay it directly to the U.S. Internal Revenue Service. This withholding acts as a prepayment of tax they will owe at the end of the year, as well as a direct payment of certain other taxes.

Medicare

A federal government program, financed by deductions from wages, that pays for certain health care expenses for older citizens. The Social Security Administration manages the program.

Social Security (FICA - Federal Insurance Contributions Act)

A federal government program that provides retirement, survivor’s, and disability benefits, funded by a tax on income, which appears on workers’ pay stubs as a deduction labeled FICA (for Federal Insurance Contributions Act, the enabling legislation).

State Withholding

A portion of an employee's wages or salary withheld by the employer as partial payment of the employee's state income tax. Also called withholding tax