Taxes Review
Exemption amount for 2017
$4,050
Itemized deduction/Tax deductibles
Appropriate for taxpayers to claim (instead of the standard deduction) when they have several financial responsibilities.
1040EZ
Appropriate tax return return for those taxpayers that have simple/basic life, and financial situations. For example, you can only claim one tax credit and the standard deduction (instead of an itemized deduction).
Tax credits
Benefits/rewards offered by the government to encourage certain activities. They reduce taxpayers' tax bill directly; however, not all of them are "refundable".
Form W-4
Completed by workers and tells employers how much to withhold in income tax.
April 15th (as long as it falls on a "business day")
Deadline for taxpayers to file their federal income tax return, as well as pay their tax bill (if any).
April 20
Deadline to file income tax return to the State of Hawaii.
Standard deduction amount for dependent
Earned income + $350
Allowances
Examples include tax credits, tax exemptions, and tax deductions - all of which help taxpayers avoid tax.
Lien/Levy, Penalty fees with Interest, poor credit history, etc..
Examples of consequences that might result when taxpayers evade paying their income taxes.
Choose which ever will lower their AGI/taxable income more.
How might taxpayers decide if they should claim the standard deduction or itemize their deductions?
True
In addition to income tax, you are also contributing to Social Security and Medicare each pay period.
"Ability to pay"
Income tax is fair according to the government because of this concept.
Refund
Indicates that taxpayers overpaid in income taxes (i.e., too much was withheld from their paycheck throughout the year).
Tax avoidance
Legal ways in which taxpayers can lower their tax bill. Examples include credits, exemptions, and deductions.
Form W-2
Mailed to taxpayers from their employers. It reports how much in federal taxes were withheld for the year.
1099-INT
Mailed to taxpayers from their financial institution when they have "unearned income".
Tax withholding
Process of paying your income tax as you earn your income; it affects your net pay.
Public goods and services
Provided by the government for the benefit of all.
Unearned income
Results when taxpayers' money is working for them and earning interest.
Dependent
Someone that's financially dependent on another the majority of the time. Must be under age 19 or a student until age 24.
General Excise Tax (GET)
Sometimes referred to as the sales tax, businesses in Hawaii are responsible for this tax but pass it to their customers.
Filing status
Standard deduction amount is dependent on this.
Tax table
Taxpayers use this when they're filing their return to determine the income tax based on their AGI and filing status.
False
The IRS only wants to tax taxpayers' earned income (i.e., the income from employers).
Net pay
The money you take home after taxes have been withheld, as well as other deductions (e.g., benefits from employer).
Personal exemption
You and your spouse can/should claim this to lower your taxable income/"AGI".
"AGI"
Your Adjusted Gross Income and the amount of your income that's subject to tax.