Personal Finance- H&R Block Budget
Challenge Week #8 Income Tax and
Forms Vocabulary
W4 - answer Form completed by an employee to indicate his or her tax situation to the
employer. It informs the employer the amount of tax to withhold from an employee's
paycheck
Student Loan Interest - answerAn income tax deduction for interest paid on a qualified
student loan
Payroll Tax - answerSocial security and Medicare taxes imposed on employers and
employees, usually calculated as a percentage of the salaries that employers pay their
staff
Form W2 - answerForm sent to employees at the end of the year. It reports an
employee's annual wages and the amount of taxes withheld from his or her paycheck
Home Mortgage Interest - answerAn income tax deduction on a home loan (in some
circumstances)
Form 1099-MISC - answerForm issued to independent contractors to report various
types of incomes
Sales Tax - answerTax on sales of certain goods and services
Tax Bracket - answerAn income range taxed at a set tax rate. Income is measured after
adjustments, deductions, and exemptions. [Note for discussion: Because federal
income taxes are progressive (rates increase as income increases) taxpayers do not
pay the tax at the highest bracket rate on all of their income]
Federal Income Tax - answerProgressive tax collected by the IRS on the annual
earnings of individuals and other entities
Tax Credit - answerAmount of money a taxpayer can subtract from the amount of tax
they owe to the government
Tax Deduction - answerReduction of taxable income that lowers the overall tax liability
Challenge Week #8 Income Tax and
Forms Vocabulary
W4 - answer Form completed by an employee to indicate his or her tax situation to the
employer. It informs the employer the amount of tax to withhold from an employee's
paycheck
Student Loan Interest - answerAn income tax deduction for interest paid on a qualified
student loan
Payroll Tax - answerSocial security and Medicare taxes imposed on employers and
employees, usually calculated as a percentage of the salaries that employers pay their
staff
Form W2 - answerForm sent to employees at the end of the year. It reports an
employee's annual wages and the amount of taxes withheld from his or her paycheck
Home Mortgage Interest - answerAn income tax deduction on a home loan (in some
circumstances)
Form 1099-MISC - answerForm issued to independent contractors to report various
types of incomes
Sales Tax - answerTax on sales of certain goods and services
Tax Bracket - answerAn income range taxed at a set tax rate. Income is measured after
adjustments, deductions, and exemptions. [Note for discussion: Because federal
income taxes are progressive (rates increase as income increases) taxpayers do not
pay the tax at the highest bracket rate on all of their income]
Federal Income Tax - answerProgressive tax collected by the IRS on the annual
earnings of individuals and other entities
Tax Credit - answerAmount of money a taxpayer can subtract from the amount of tax
they owe to the government
Tax Deduction - answerReduction of taxable income that lowers the overall tax liability
