Chapter 10: Income and Taxes

sales tax

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

excise tax (sin tax)

When you buy specific items like cigarettes, alcohol, airline tickets or gas, you will pay _________. Things you don't need but are luxuries.

inheritance tax

a state tax collected on the property left by a person to his or her heir(s) in a will when they pass away.

Withholdings and deductions are . . .

expenses that are taken out of your paycheck

Salary

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

audit

to check the accuracy of financial accounts and records. Always keep your filed taxes for at least three years in case the IRS decides look at your tax return.

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

1. Make sure to fill out your W-4 form correctly by preparing for it and looking at the form carefully before you go to your new job and have to fill one out. 2. Make sure not to loose your W-2 form when it comes in the mail. It holds key information to file for your tax return. 3. File for your taxes with a professional or with Turbo Tax 4. Make sure to fill out not only a 1040 using your W-2, but a 1098-T for student tuition and book payments, 1093-E if you take out a student loan, and Schedule A itemize deductions like property tax, medical expenses, and charitable contributions. 5. Write down your email and password used after you make your first account and save it somewhere you will not loose it. 6. Make sure to connect your tax return to your bank through your direct deposition number from your bank account. You can find this on the bank website. This will make your tax return go directly into your bank account. 7. File before April 15th. Try to file asap so that your return can come back asap.

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

Advocates: wealth tax increases revenues by taxing the real estate and investment holdings of wealthy tax payers. It can encourage people to spend wealth that can sit and be work down by taxes. It can reduce wealth inequalities since the wealthiest 1% of Americans hold a majority of the country's wealth. Critics: Wealth tax causes citizens to pay taxes on the same assets multiple times-- called double taxation. Wealth tax reduces the incentive to keep working for money that will be taken away by tax laws. It encourages wealthy business owners and investors to leave the U.S. or never come here in the first place.

Federal Tax Return

Every American who earns an income must file each year.

Wealth Tax

Property tax, inheritance tax, estate tax, and gift tax are all examples this.

Is getting a big tax refund a good thing?

Getting a big tax refund is not necessarily a good thing because that is your money to begin with.

Giving

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

What does the Form W-4 estimate?

How much tax you will owe based on your personal situation.

Who must pay taxes?

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

Passive Income

Money earned on a regular basis with little or no effort required to maintain it. Some things that produce passive income are real estate, renting out property, or selling content on a blog.

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

More, more

Net Income

Revenues - Expenses, take home pay after all the taxes and deductions

April 15

The deadline for filing your income tax return.

1040 Form

The main IRS form that most Americans use to file their taxes

Wages

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

consumption tax

The tax on the purchase of goods or services

tax liability

The total tax a person or business has to pay.

W-4

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

How do you file your taxes?

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

where you live, in your states

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

1040 Form/Federal Tax Return

When someone says they need to file their taxes, they're talking about these forms.

portfolio investment

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

Gross Income

the total amount of income from wages before any payroll deductions

Consumption tax

pays for things everyone gets to enjoy, like parks, libraries, and schools