Earned Income – Compensation from participation in a business including wages, salary, tips, commissions and bonuses.

Internal Revenue Service – The federal agency responsible for administering and enforcing the Treasury Department's revenue laws, through the assessment and collection of taxes, determination of pension plan qualification, and related activities.

Personal Income Tax – Annual tax levied by the Federal government, most states, and some local governments, on an individual's income.

Sales Tax – A tax levied by a state or city on the retail price of an item, collected by the retailer.

Progressive tax – A tax system in which those who earn higher incomes pay a higher percentage of their income than those with lower incomes. A graduated tax is one example.

Regressive Tax – A tax that takes a larger percentage of the income of low-income people than of high-income people.

Flat Tax – A system in which all levels of income are taxed at the same rate.

W-2 form – Wage and Tax Statement. A tax form prepared by an employer and given to an employee to be filed with his/her 1040 form, listing wages earned during that year, federal and state taxes withheld, and Social Security tax information. Employers must provide employees their W-2 forms by the deadline that is set by the IRS.

W-4  form – A tax form prepared by an employee for an employer indicating the employee's exemptions and Social Security number, and enabling the employer to determine the amount of taxes to be withheld for the employee.

1040 form – U.S. Individual Income Tax Return. This form is used for individuals in filing their annual income tax returns. It is used by individual taxpayers in reporting their financial income status for the year in order to determine if any additional taxes are owed or if the taxpayer is owed a refund for taxes already paid throughout the year.