HRB-02 Wages Income & Taxes
Adjusted Gross Income (AGI) - ANS-Adjusted gross profits equals gross income LESS
discounts that are allowable, irrespective of whether or not personal deductions are itemized.
Credits (Nonrefundable) - ANS-Credits which could most effective reduce tax legal responsibility
to ZERO. Some credits may be carried to different tax years.
Credits (Refundable) - ANS-Credits in which the IRS will ship the taxpayer a REFUND for any
amount in extra of the tax liability.
Dividends - ANS-A stockholder's percentage of the income of a business enterprise.
Earned Income - ANS-• Income from PERSONAL SERVICES as distinguished from income
generated by assets or other assets.
• Includes all quantities received as wages, recommendations, bonuses, different employee
repayment, and self-employment profits, whether within the form of cash, services or assets.
Exemption - ANS-$three,650 for 2009, allowed by using law as a reduction of profits that could
in any other case be taxed.
Federal Income Tax Withheld - ANS-The quantity taken out of income by using the payer and
submitted to the IRS as an increase charge of the taxpayer's federal profits tax.
Gross Income - ANS-Total WORLDWIDE earnings received in the form of money, assets, or
services that is SUBJECT TO TAX.
Income - ANS-The gain derived from capital, labor or a combination of the two. It is
distinguishable from the capital itself.
Making Work Pay Credit - ANS-• 6.2% of earned earnings as much as $four hundred ($800
MFJ)
• Reduced by means of $250 monetary recovery fee
• Reduced if AGI over $seventy five,000 ($one hundred fifty,000 MFJ)
• Disallowed if MAGI is $ninety five,000 ($one hundred ninety,000 MFJ) or more, OR
• Taxpayer can be claimed as a based.
Medicare and Social Security Tax Rates - ANS-Medicare 1.Forty five%
Social Security 6.2%
Medicare Part A - ANS-The medicare tax taken out of an worker's wages or the same tax paid
by a self-hired character on net self-employment profits. The medicare A tax price is 1.Forty
five% of gross wages (2.Nine% for self-hired individuals).
Non-qualified Retirement Plan - ANS-• Does NOT meet the requirements of the Internal
Revenue Code.
• ANY quantity in W2 Box eleven has additionally typically been protected in Box 1.
Rounding - ANS-Each amount .50 or extra is rounded as much as the following whole dollar.
Social Security Tax Withheld - ANS-• Employee's share of social protection tax that was taken
out of the worker's pay and submitted at the side of the business enterprise's proportion to the
IRS via the enterprise.
• Both the employee and the company pay 6.2% of the primary $106,800 of the employee's
gross wages (for 2009).
Adjusted Gross Income (AGI) - ANS-Adjusted gross profits equals gross income LESS
discounts that are allowable, irrespective of whether or not personal deductions are itemized.
Credits (Nonrefundable) - ANS-Credits which could most effective reduce tax legal responsibility
to ZERO. Some credits may be carried to different tax years.
Credits (Refundable) - ANS-Credits in which the IRS will ship the taxpayer a REFUND for any
amount in extra of the tax liability.
Dividends - ANS-A stockholder's percentage of the income of a business enterprise.
Earned Income - ANS-• Income from PERSONAL SERVICES as distinguished from income
generated by assets or other assets.
• Includes all quantities received as wages, recommendations, bonuses, different employee
repayment, and self-employment profits, whether within the form of cash, services or assets.
Exemption - ANS-$three,650 for 2009, allowed by using law as a reduction of profits that could
in any other case be taxed.
Federal Income Tax Withheld - ANS-The quantity taken out of income by using the payer and
submitted to the IRS as an increase charge of the taxpayer's federal profits tax.
Gross Income - ANS-Total WORLDWIDE earnings received in the form of money, assets, or
services that is SUBJECT TO TAX.
Income - ANS-The gain derived from capital, labor or a combination of the two. It is
distinguishable from the capital itself.
Making Work Pay Credit - ANS-• 6.2% of earned earnings as much as $four hundred ($800
MFJ)
• Reduced by means of $250 monetary recovery fee
• Reduced if AGI over $seventy five,000 ($one hundred fifty,000 MFJ)
• Disallowed if MAGI is $ninety five,000 ($one hundred ninety,000 MFJ) or more, OR
• Taxpayer can be claimed as a based.
Medicare and Social Security Tax Rates - ANS-Medicare 1.Forty five%
Social Security 6.2%
Medicare Part A - ANS-The medicare tax taken out of an worker's wages or the same tax paid
by a self-hired character on net self-employment profits. The medicare A tax price is 1.Forty
five% of gross wages (2.Nine% for self-hired individuals).
Non-qualified Retirement Plan - ANS-• Does NOT meet the requirements of the Internal
Revenue Code.
• ANY quantity in W2 Box eleven has additionally typically been protected in Box 1.
Rounding - ANS-Each amount .50 or extra is rounded as much as the following whole dollar.
Social Security Tax Withheld - ANS-• Employee's share of social protection tax that was taken
out of the worker's pay and submitted at the side of the business enterprise's proportion to the
IRS via the enterprise.
• Both the employee and the company pay 6.2% of the primary $106,800 of the employee's
gross wages (for 2009).
