Personal Finance Ch.4

A general sales tax is also referred to as an excise tax

False

A tax deduction directly reduces the amount of taxes owed

False

Most people mail the full amount owed in federal income tax each April

False

Taxable income refers to the amount deduction from a person's pay

False

An example of an adjustment in income is

IRS contributions

________ is deductible as an itemized deduciton

Mortgage interest

When an IRS agent visits your home or office

field audit

What is tax- deferred income

income that will be taxed at a later date

An example of tax-exempt income is

interest from municipal bonds

What are 5 filing status categories

1) Single 2) Married 3) Widow 4) Household 5) Married, singled filed

Four types of taxes

1) Taxes on purchases 2) Taxes on property 3) Taxes on wealth 4) Taxes on earning

How much of every dollar goes to taxes

1/3 or 30%

What are the 4 types of tax forms and what makes each unique

A. 1040 EZ B. 1040/1040 A C. 1040 X D. 1040 NR/ 1040-EZ

What does the AGI stand for

Adjusted Gross Income

Which is a better (tax credit or tax deduction)

Tax credit

What is the difference between a tax credit and a tax deduction

Tax deductions subtracts from adjusted gross

Enrolled agents are IRS auditors who visit people's homes to verify deductions

True

An exemption refers to

a reduction from adjusted gross income