Personal Financial Management - Ch 3

For 2011, each personal exemption reduced taxable income by

$3,700.

The proper name of the so-called short form is

1040A.

You made an error when you filed your tax return last year. You can correct this error by filing Form

1040X.

A taxpayer can file for an automatic extension of ____ months.

6

A declaration of estimated taxes is made by filing

Form 1040 ES.

A tax audit is a(n)

IRS attempt to verify the accuracy of return.

Itemized deductions are listed on Schedule

Schedule A.

____ income is subject to federal taxes.

Taxable

For tax purposes, head-of-household refers to

a single individual with dependents.

Which of the following is NOT one of the three basic categories for individual income?

gross income

The federal government gets the majority of its revenue from the ____ tax.

income

Your income tax withholding is dependent on

income level and number of withholding allowances.

The total amount that you owe for income tax in one year is our tax

liability.

Pete and Pam are married with four dependent children. Pete and Pam can legally file using which of the following filing statuses?

married filing separately, or married filing jointly (a and b)

The federal income tax is

progressive.

A ____ would be most likely to have to pay estimated taxes.

self-employed plumber

If you do not wish to itemize deductions, you can use the

standard deduction.

A progressive tax system is one in which higher-income people pay ____ than lower-income people.

tax at a higher rate

Estimated tax payments must be made by those who do not have taxes deducted from their earnings.

true

Personal exemptions are tax deductions based on the number of taxpayers and dependents in the taxpayer's household.

true

Russ and Lois got married December 30. Since they were single for most of the year, however, they can legally file as married taxpayers in the year of the wedding.

true

Tax avoidance is legal, tax evasion is illegal.

true

The Federal personal income tax is a progressive tax.

true

You have up to three years after mailing your tax return to file an amended tax return (1040X).

true

You should itemize deductions when total itemized deductions exceed the standard deduction.

true