| Definitions
of tax terms: F-G |
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| One of the
hardest things about taxes is learning the language. You've
got all the forms and instructions, but it seems they're harder
to decipher than your VCR user manual! Here are some of the
more common tax terms to help you become tax fluent in no time. |
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J | K
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L | M
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| Fair
Market Value |
The price an item
would sell for, assuming the buyer and seller both have reasonable
knowledge of the item's worth and are not under pressure to
buy or sell. To determine fair market value, it is common to
compare other similar properties sold near the same time as
your property. Also called true market value or current market
value. |
| FICA
(Federal Insurance Contributions Act) |
The Federal Insurance
Contributions Act consists of payments to the Social
Security retirement supplement system and the Medicare
hospital insurance program. A tax for each component is levied
on employers, employees and certain self-employed
individuals. These taxes are taken out of your paycheck separately
from your income taxes. |
| Fiduciary
|
An individual,
company or association responsible for managing someone else's
assets. Fiduciaries include executors of wills and estates,
trustees, receivers in bankruptcy and those responsible for
managing the finances of a minor. |
| Filing
Extension |
An additional amount
of time to file your return. A filing extension, however, does
not give you more time to pay your taxes. |
| Filing
Status |
Your filing status
determines your tax bracket and amount of taxes you must pay.
Your filing status is an important factor in determining your
standard
deduction and tax rate and whether you must file a return.
The five filing status types are Single,
Married
Filing Jointly, Married
Filing Separately, Head
of Household and Qualifying
Widow/er. |
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| Flexible
Spending Account |
A plan to which
you contribute money each pay period to cover additional medical
insurance coverage or child care. Under this plan, you then
receive medical insurance and child care tax-free. |
| Form
1040EZ |
This form is the
simplest one to use to file your annual tax return. You may
use it if you're single or married, don't have any dependents,
your income is $50,000 or less and your interest
income is $400 or less. |
| Form
W-2 |
By January 31 of
each year, your employer will provide you with a statement of
how much you earned in wages, tips and other compensation from
the previous year. This form will reflect state and federal
taxes, social
security, Medicare
wages and tips withheld. |
| Form
W-4 |
This is the employee's
withholding
allowance certificate, and the information you fill out
here allows your employer to calculate the amount of tax to
withhold from your pay. You can file a new Form W-4 anytime
your tax situation changes and you choose to have more or less
tax withheld. |
| Form
1099-DIV |
A statement you
get from the broker or a company whose stock you own that summarizes
your dividends.
The main purpose of this form is to report the dividends you
received, income tax withheld from dividends and foreign taxes
paid on dividends. |
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| Form
1099-INT |
The statement you
receive from payers of interest
income, such as banks and savings institutions, that summarizes
your interest income for the year. This form is also used to
report other tax items related to your interest income, such
as early withdrawal penalties, federal tax withheld and foreign
tax paid. |
| Fringe
Benefit |
Employee compensation
other than your wages, tips and salaries, such as health insurance,
life insurance and pension plans. Most fringe benefits are deductible
by your employer and you do not include them in your income.
However, if your employer pays for more than $50,000 of life
insurance for you, your employer must include the cost of providing
the excess life insurance with your income on your Form
W-2. |
| Full
Market Value |
In reference to
property
taxes, usually refers to the tax rate applied to 100 percent
of the property's value. Also full cash value. |
| FUTA
(Federal Unemployment Tax Act) |
The tax that employers
pay to fund unemployment compensation programs. |
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| Garnishment
|
An amount withheld
from your pay and remitted to another party, such as a creditor.
You must include in your taxable
income any amount that was garnished from your pay, because
the full amount of your pay is considered to have been received
by you even though some was withheld to pay your debts. |
| Gift
Tax |
A tax levied on
an individual who gives more than $10,000 per year to another
individual. |
| Gross
Dividends |
The total dividends
you received. Your gross dividends are the sum of any ordinary
dividends, capital
gains distributions and nontaxable
distributions you received during the tax year. |
| Gross
Income |
This is all the
money, goods and property you receive during the year before
you reduce it by using adjustments,
deductions
or exemptions. People
who use the barter system have to include the value of whatever
they've received in exchanged for services as part of their
gross income. |
| Gross
Income Test |
One of five tests
a person must meet for you to claim him or her as a dependent
so that you can take an exemption.
To meet this test, the person must have less than $2,700 in
total income during the tax year. If this person is your child
under 19 years old, or a full-time student under 24 years old,
he or she does not need to meet this test. |
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| --Posted Oct. 29, 1999 |
