Everfi Employment & Taxes – Basic Banking Answers

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TermDefinition
W-4A federal tax form filled out by an employee to indicate the amount that should be withheld from his/her paycheck for taxes.
Gig economyA flexible market that allows you to work short-term independent jobs.
Net payTake home pay; the amount of a paycheck after all taxes and deductions have been taken out of your paycheck.
TaxesMoney paid to the Federal, State, and Local governments for schools, parks, roads, emergency services, etc.
Withholding (tax withheld)Tax payments taken out of an employee’s pay before he or she receives it.
Filing statusDescribes your tax-filing group which is based on your marital status (single, married filing separately, married filing jointly).
Personal allowancesItems or exemptions you can claim on your W-4 form that reduce the amount of tax taken out of your paycheck.
Gross payThe total amount of an employee’s earnings before deductions are taken out.
FICA (Federal Insurance Contributions Act)Money that goes to Social Security and Medicare programs.
DeductionsMoney taken out of a paycheck to pay for employee benefits like insurance or retirement plans.
W-2A form that tells you how much you’ve made and how much you’ve paid in taxes in the last year; you will use this to fill out your tax return.
Standard deductionAn amount of money set by the IRS that is not taxed.
Taxable incomeIncome on which tax must be paid; total income minus exemptions and deductions.
1040A tax form filled out by an individual and filed with the IRS that determines the amount of income tax owed in a single year.
Routing numberA nine-digit bank code used in the US on the bottom left of checks used to identify the financial institution (bank).
Account numberThe number that identifies a particular bank account.
BenefitsCompensation in forms other than direct payment (health insurance, paid time off, disability insurance, retirement plan).
Health insuranceProvides money to pay for health care for illness or injury.
Disability insuranceMoney that replaces some of your lost income if you are injured or sick and can’t work.
Retirement savings planAn account into which employees contribute a portion of their earnings to save for their retirement; employers may match these contributions.
Associate’s Degree2 year college degree from a community college, university, college, or technical school.
Bachelor’s DegreeAn academic degree which usually takes four years to earn and is awarded by a college or university.
Sales TaxA tax on purchases or services (not based on income).
Paid Time OffA benefit that provides employees with pay for time when they are not working.
Education and lifetime earningsGenerally, the more education you receive, the higher your lifetime earnings will be.
Net payThe amount of money you’re paid after all taxes and deductions are taken out of your paycheck.
Gross payThe amount of money you earn before taxes are subtracted.
W-4 formA form used to inform your employer of how much federal income tax to withhold from your paychecks.
W-2 formA form that tells you how much you’ve earned and how much taxes you’ve paid in the last year.
W-2 formA form that tells you how much taxes you’ve paid in the last year based on how much you’ve earned.
TaxesMoney paid to the government to fund schools, government departments, roads, and emergency services.
Tax lawsLaws that differ between states and require everyone to file federal taxes, but each state has its own tax laws.
Tax preparation softwareA tool that can help prepare and file taxes by posing questions to collect necessary information.
W-2 or 1099 formForms that report income which needs to be used to file taxes.
Why is it useful to have your bank account and routing numbers when using tax preparation software?To indicate where tax refunds should be sent.
Deductions and creditsCan reduce what you owe in taxes each year, so it’s important to claim all eligible ones.
BenefitsHealthcare, paid time off, disability insurance, and matching contributions to a retirement account are all types of benefits available from your employer.
Financial institutionA place to manage money that typically offers features such as savings and checking accounts, loans, and credit cards.
Investment products/tradingNot a common feature of a financial institution.
Which of the following is NOT a common feature of a financial institution? Access to investment advice
Which of the following statements about check cashing companies is TRUE? They charge high fees.True
Which of the following financial institutions typically have the highest fees? Check cashing and payday loan companies
Which of the following statements about check cashing companies is FALSE? They charge low fees.
Which type of bank account typically offers the least (if any) interest? Checking accountTrue
Savings accounts typically offer more interest than what type of account? Checking accountTrue
Which type of bank account is best for everyday transactions? Checking AccountTrue
A savings account that compounds interest daily will earn a higher return than a savings account that pays simple interest daily.True
Which savings account will earn you the least money? One that earns simple interest monthly.True
Which savings account will earn you the most money? One that compounds interest daily.True
Which of the following statements about savings accounts is FALSE? Savings accounts allow an unlimited amount of withdrawals each month.
Which of the following statements about savings accounts is FALSE? Savings accounts don’t usually require a minimum balance.
Which of the following statements about savings accounts is FALSE? Savings accounts don’t usually pay interest on the money you deposit.
Which of the following statements is TRUE? If there is a mistake on your bank account, you should contact your financial institution immediately.True

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