Chapter 3 Income Tax
Student loan interest and tuition can be listed as ____ on form 1040A
adjustments to gross income
As an alternative to itemizing deductions, taxpayers may
claim the standard deduction
money in this country is collected from citizens and redistrubuted according to priorities determined by
congress
For people who use Form 1040EZ or 1040A, the IRS allows...
electronic payment of tax returns and of taxes due (aka: both of these)
A sales taxon specific products and services is the
excise tax
A taxpayers filing status is unrelated to his or her marital status
false
Only a married person is considered a head of the household
false
You may not use short form 1040EZ for a joint return if your total taxable income is $20,000 or more
false
What is a type of IRS audit requiring a taxpayer to appear in person and bring records?
office
Indirect Taxes
pay taxes that are hidden in the price of goods Ex: gas, utilities, alcoholic beverages, and cigs. The taxes are passed on to the consumer indirectly through higher prices
a tax that increases in proportion to increases in income is known as a ________ tax
progressive
Which of these is a form of a flat tax
property tax
incoming taxes, which are treated as income by the government, are called
revenue
in order to avoid itemizing deductions, a person may elect to take the _______, which is a flat amount
standard deduction
after the standard deduction and exemptions are subtracted from adjusted gross income, you arrive at your _______ income
taxable
to compute your tax liability, turn to the tax tables and look up the amount called...
taxable income
Alimony is taxable to the person receiving it and is deductible to the one paying it
true
Money received in the form of wages, tips, salaries, or interest is taxable income
true
The IRS is an agency in the Department of Treasury
true
The income tax is an example of a progressive tax
true
The power to levy federal income taxes rests with the US Congress
true
You can file an amended tax return (1040X) if you discover you made an error
true
unemployment compensation benefits received are taxable to the person who received them
true
A type of tax for which the rate stays the same regardless of income is called ?
Proportional Taxes
An ? tax allows a higher income person to pay a lower percentage of income in taxes than an lower income person
Regressive Taxes
An ? Is an amount subtracted directly from tax owed
Tax Credit
How are tax deductions different from tax credit?
Tax deductions--amount deducted from income. Tax credits--amount deducted from tax owed.
To intentionally fail to pay taxes owed is to commit a serious crime called ?
Tax invasion
Taxable Income
The amount on which you will pay income tax.
A tax system that is based on ? requires all citizen to be responsible for preparing and filing their tax returns and time and paying taxes due
Voluntary Compliance
When all sources of taxable income are added together the total is called ? income
Gross Income
How is gross income different from taxable income?
Gross income--all taxable income you receive. Taxable income--income on which you will pay taxes (less than gross income)
An administrative agency of the federal government that collects taxes and enforces tax laws is the ?
IRS
Money paid to a former spouse which is taxable income for that persons support is called ?
Alimony
Gross Income
All taxable income you receive, including wages, salaries, and tips.
Tax credit
An amount subtracted directly from the taxed owed
Exemption
An amount you may subtract from your income for each person who depends on your income to live.
Tax returns must be filed by
April 15 of the following year
An exemption of tax returns by the IRS is called an ?
Audit
Money paid to a former spouse which is not taxable income is called?
Child Support
Expenses that can be subtracted from gross income are called ?
Deductions
An amount that can be subtracted from your income for each person who depends on your income to live is an ?
Exemption
Itemized Deductions
Expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income.
What is the difference between Form 1040EZ and Form 1040A?
1040EZ--short form for single/married and claim no dependents. Income must be less than $100,000. 1040A--longer form. Income must be less than $100,000 and can take more deductions.
The amount remaining when adjustments are subtracted from gross income is called ?
Adjusted Gross Income