EPF - Unit 5 - Taxation Exam
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Gross pay - Answer This is the total amount of money an employee earns before any
deductions are taken out. This includes regular pay, bonuses, and overtime pay.
Payroll deductions - Answer These are amounts taken out of an employee's paycheck
before the employee receives their net pay. These are typically made for various
reasons, including taxes, insurance premiums, retirement contributions, and other
benefits.
Net pay - Answer This is the amount of money an employee takes home after all
deductions, such as taxes, insurance premiums, and retirement contributions, have
been taken out.
Tax rate schedule - Answer This is a table that shows the tax rate that applies to
different levels of taxable income. This data is used to calculate the amount of tax owed
based on an individual's or business's taxable income.
Social Security Tax - Answer This is a tax that funds the Social Security program and
provides retirement, disability, and survivor benefits.
Medicare Tax - Answer This is a tax that funds the Medicare program and provides
health insurance for people 65 and older and certain disabled individuals.
Pre-tax deductions - Answer are payroll deductions that are taken out of an employee's
salary before taxes are calculated and applied. The purpose of these is to reduce an
employee's taxable income, resulting in a lower tax liability and a higher take-home pay.
401(k) - Answer This is a type of retirement savings plan offered by some employers.
Employees can contribute a portion of their pre-tax pay into this retirement plan, which
is then invested and grows tax-free until the employee withdraws the funds in
retirement. Employers may also make matching contributions.
Health insurance premiums - Answer These are the regular payments made by
individuals or their employers to a health insurance company to maintain health
coverage. These payments are used to pay for the cost of the health insurance policy.
Life insurance premiums - Answer Amounts taken out of an employee's pay to cover life
insurance costs. These amounts are used to pay for the cost of the policy, which
provides a death benefit to the policyholder's beneficiaries in the event of the
policyholder's death.
Flexible Spending Account (FSA) - Answer This is a type of pre-tax benefit account that
allows employees to set aside money from their salary to pay for certain qualified
Latest Update
Gross pay - Answer This is the total amount of money an employee earns before any
deductions are taken out. This includes regular pay, bonuses, and overtime pay.
Payroll deductions - Answer These are amounts taken out of an employee's paycheck
before the employee receives their net pay. These are typically made for various
reasons, including taxes, insurance premiums, retirement contributions, and other
benefits.
Net pay - Answer This is the amount of money an employee takes home after all
deductions, such as taxes, insurance premiums, and retirement contributions, have
been taken out.
Tax rate schedule - Answer This is a table that shows the tax rate that applies to
different levels of taxable income. This data is used to calculate the amount of tax owed
based on an individual's or business's taxable income.
Social Security Tax - Answer This is a tax that funds the Social Security program and
provides retirement, disability, and survivor benefits.
Medicare Tax - Answer This is a tax that funds the Medicare program and provides
health insurance for people 65 and older and certain disabled individuals.
Pre-tax deductions - Answer are payroll deductions that are taken out of an employee's
salary before taxes are calculated and applied. The purpose of these is to reduce an
employee's taxable income, resulting in a lower tax liability and a higher take-home pay.
401(k) - Answer This is a type of retirement savings plan offered by some employers.
Employees can contribute a portion of their pre-tax pay into this retirement plan, which
is then invested and grows tax-free until the employee withdraws the funds in
retirement. Employers may also make matching contributions.
Health insurance premiums - Answer These are the regular payments made by
individuals or their employers to a health insurance company to maintain health
coverage. These payments are used to pay for the cost of the health insurance policy.
Life insurance premiums - Answer Amounts taken out of an employee's pay to cover life
insurance costs. These amounts are used to pay for the cost of the policy, which
provides a death benefit to the policyholder's beneficiaries in the event of the
policyholder's death.
Flexible Spending Account (FSA) - Answer This is a type of pre-tax benefit account that
allows employees to set aside money from their salary to pay for certain qualified
