Financial Management Chapter 7 - Federal Income Tax
proportional taxes
Flat taxes for which the tax rate remains the same regardless of income
dependent
A person who lives with you and for whom you pay more than half of his or her living expenses
standard deduction
A stated amount you can subtract from adjusted gross income if you do not itemize deductions
voluntary compliance
A system in which all citizens are expected to prepare and file income tax returns of their own accord without force
Gross income
All taxable income you receive, including wages, salaries, and tips
tax credit
An amount subtracted directly from the tax owed
exemption
An amount you may subtract from your income for each person who depends on your income to live
audit
An examination of your tax return and records by the IRS
itemized deductions
Expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income
adjusted gross income
Gross income less adjustments
tax brackets
Income tax ranges from 10 to 35 percent based on income
Progressive taxes
Taxes that take a larger share of income as the amount of income grows
taxable income
The amount on which you will pay income tax
tax evasion
Willful failure to pay taxes
Filing status
Your tax-filing group based on your marital status
revenue
incoming funds
Regressive taxes
taxes that take a smaller share of income as the amount of income grows