Tax Concept

When calculating federal income taxes, "income" includes all of the following categories EXCEPT:

active income

Gross income after certain reductions have been made is

adjusted gross income

When calculating federal income taxes, what increases "income"?

alimony

Adjustments to income include all of the following EXCEPT:

charitable contributions

A tax due on the purchase of gasoline is called a(n):

excise tax

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.

income tax

Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction? - $10,000 gift to her cousin - credit card interest - medical and dental expenses less than 10% of AGI - miscellaneous expenses in excess fo 2% of AGI - moving expenses for a new job that is 25 miles from her old home

miscellaneous expenses in excess fo 2% of AGI

Payroll deductions for federal government retirement benefits (such as old age, survivor, and disability insurance) are called

social security taxes

Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?

subtract his itemized deductions

Income that is never subject to tax is called

tax-exempt income