Ramsey Chapter 10

The deadline for filing your income tax return usually falls on _________.

April 15

Always keep your filed taxes for at least three years in case the IRS decides to ______ your tax return.

Audit

The tax on the purchase of goods or services is called _____________.

Consumption tax

There are two general types of taxes. Taxes on the money you _________ and taxes on the money you ___________.

Earn; spend

What is the difference between earned income, passive income, and investment income?

Earned income is wages or salary that is generated by the work someone performs. In other words, it is the amount of money a person earns from their 9-5 job. Passive income is income generated on a regular basis with little effort like rental properties, blogs, or YouTube channels. Investment income is the money earned from investments like stocks or bonds.

When you buy specific items like cigarettes, alcohol, airline tickets or gas, you will pay _________.

Excise tax

Withholdings and deductions are . . .

Expenses that are taken out of your paycheck

Government deficit spending is a good thing because it lowers the amount of taxes that need to be collected.

False

When you pay taxes on a purchase, the seller gets to keep that money.

False

Every American who earns an income must file a _________ each year.

Federal tax return

When someone says they need to file their taxes, they're talking about filling out a ________.

Federal tax return

What is the main IRS form that most Americans use to file their taxes?

Form 1040

Explain the difference between gross income and net income.

Gross income is the amount you earn before taxes and other payroll deductions. Net income is basically my take-home pay, it is the amount a person earns after taxes have been deducted from their paychecks.

What does the Form W-4 estimate?

How much tax you'll owe based on your personal situation.

When you make ____ money, you will pay _____ in taxes.

More; more

What are some ways you can make tax season a little easier?

One way that I could make tax season easier on myself is by hiring a trained professional to help me do my taxes. Another way would be to get help through a trusted online tax service like turbo tax. Lastly, I could write down or jot down a schedule to help me keep track of the forms has to file.

Consumption tax pays for things everyone gets to enjoy, like . . .

Parks, libraries, and zoos

Renting out property or selling content on a blog are examples of ______________.

Passive income

Why are people required to give a portion of their income to the government? Give examples of government services that taxes fund.

People are required to pay taxes to help fund building and pay for: infrastructure, social security, parks, public schools, libraries, zoos, museums, etc. Some services that taxes fund are Medicare, Medicaid, and having various first respondents. Taxes may seem like a bad thing, however, they do help better our society through having working roads, hospitals, and public schools.

You can produce ____________ by buying and selling stocks, bonds, mutual funds, and real estate.

Portfolio/investment income

Why is receiving a large tax refund a bad thing?

Receiving a large federal tax return is bad because the government is taking your money, investing it, and giving you no interest for your money. They are giving back the same amount of money that you could have invested or saved, and allow your money to grow.

Only a few states have inheritance tax, which . . .

Requires you to pay tax on an asset you receive when someone passes away

A fixed, annual rate of pay that doesn't change by working more or fewer hours is called ____.

Salary

When you buy clothes or check out at the grocery store, you will pay _____________.

Sales tax

Which of the following is most likely to need the help of a tax professional?

Self-employed people

Describe some of the arguments that supporters and opponents of wealth tax make.

Some supporters of wealth tax say that the wealth tax helps increase the total amount of revenue from continually taxing the assets of the wealthy. The wealth tax can decrease wealth inequality across the board. Wealth tax also encourages people to give out their money or invest it so it won't be worn down by taxes. A prominent argument against wealth tax would be that it causes people to lose their work ethic to become wealthy. It encourages people once they build their wealth in America to migrate to a different country where their money won't be taxed. There are pros and cons to each side of the argument.

Net income is also called your _________.

Take-home pay

What is the total tax a person or business has to pay called?

Tax liability

Why shouldn't people let tricky tax situations get in the way of being outrageously generous?

This should not get in the way of being exceedingly generous because there are loopholes you can find with a tax professional, Also giving makes you feel better as a person so no one should stop that source of serotonin.

Getting a big tax refund is not necessarily a good thing.

True

Giving to a non profit organization can help lower your taxable income.

True

If you work and earn money, you will have to pay taxes.

True

Those who properly fill out their Form W-4 shouldn't have too much or too little taxes withheld.

True

Using online tax software or hiring a tax professional are both good options depending on your situation.

True

The money you earn hourly for your time and effort at work is called your _____________.

Wages

Property tax, inheritance tax, estate tax, and gift tax are all examples of __________.

Wealth tax

Wealth taxes are often dependent on _________, so it's a good idea to understand the tax rules ___________.

Where you live; in your state