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