Chapter 5

When preparing your tax return, the total of your income from all sources is your ___________.

adjusted gross income

Last year Kelly and Matt began placing $100 a week into an interest-bearing savings account at their bank. At the end of the year, the couple had saved $5,200 and had earned $173 of interest. What form will the bank provide both the IRS and Kelly and Tom stating the interest earned on their account during the tax year?

1099-INT

Last year Pilar earned $32,200 before taxes working as a police office. She also earned $9,600 before taxes working part-time on the weekends as a security guard. She had no other income during the year. The $41,800 she earned before taxes is known as her ___________ on her income tax return.

Adjusted gross income

The number of ______ you claim on your W-4 determines the amount of money withheld from your pay.

Allowances

Dwayne must cross a toll bridge every day he drives to work. The toll he pays is an example of an __________ tax.

Benefits received principle

Last year Pete and Courtney earned over $80,000 in adjusted gross income. Earlier in the year the couple relocated to Houston, Texas, as a result of Courtney's promotion. They spent over $7,000 in moving expenses during this relocation process. They can subtract this moving expense from their income before calculating taxes. This moving expense is known as ab?

Deduction

Nigel's mother, Helen, owned about 5,000 acres of land. When Helen died, her will stated that each of her three children was to receive equal squares of this property. What type of tax will Nigel and his brother and sister most likely have to pay upon receipt of Helen's property?

Estate tax

Taxes on property that will be inherited from a deceased person are called?

Estate taxes

Janette wants to take her family on vacation to Orlando, Florida, where she expects to rent a car. The tax imposed on gasoline and airline travel is what type of tax?

Excise tax

Taxes on the sale of tobacco, gasoline, and alcohol are?

Excise tax

Employers pay twice as much as much social security and Medicare than each employee does.

False

Gross income is the amount you receive after withholding's are subtracted from your gross pay.

False

Most young people do not qualify to use the simplest of the income tax forms, 1040EZ.

False

The IRS will impose a fine on any taxpayer who fails to sign his or her tax return before it is filed.

False

For nine months Michael and his family have been receiving monthly benefits and payments through social security and Medicare. The money for these benefits is funded through taxation from a federal law known as the___________.

Federal Insurance Contributions Act (FICA)

A form filled out by an employee that provides information needed to determine the proper amount to withhold from his or her paycheck is a __________?

Form W-4

The amount you earn before taxes are withheld is your?

Gross income

Kimberly and Ian own a home and as a result pay property taxes. Their son, Noah, recently moved into a two-bedroom apartment with his cousin, Kyle. Each month they pay $625 in rent but no apparent property tax. The type of tax Noah's landlord includes in the rent to cover the apartment's property tax is an__________.

Indirect tax

The name of the federal agency that collects and monitors income tax is known as the ________________.

Internal Revenue Service (IRS)

Last year when Robert's taxable income was $24,000, he payed $1,800 in federal income tax. Robert's neighbor Ronda has a taxable income of $33,000 and paid $3,300 in federal income tax. According to these data, the federal income tax was________ last year?

Progressive

Roads, schools, national defense, and the services of regulatory agencies are considered to be _____?

Public goods

Deanna and Ross both own car and buy $20.00 worth of gasoline each week. Deanne earns almost twice as much as Ross. Therefore, the share of her income that she pays for gasoline tax is smaller than the share Ross pays of his. These data show that the tax on gasoline is?

Regressive

Nancy enjoys shopping at her local superstore and often goes there on Saturday to purchase her groceries, children's school supplies, shoes, film, and clothing. The type of tax that is added as the checkout to the price of many of the goods Nancy purchases is called________________-

Sales tax

When Naomi was two months old, her parents contacted the U.S. government and received a number that is uniquely hers. Now that Naomi is working, she will need to memorize this number because it identifies her as a taxpayer and keeps track of her earnings and tax records throughout her lifetime. This number is known as her_______________________.

Social security number

Huong has been saving money for a down payment on a new car. She has looked at several different makes and models. She finally located the "car of her dreams." It turns out that her "dream car" is foreign made and quite expensive because it was taxed imported into the U.S. This type of tax is called?

Tariff

To control the flow of products that are imported into the United States, some _______ have been imposed on these products.

Tariffs

A set of forms that taxpayers use to calculate their tax obligation is a___________?

Tax return

Neil works as a waiter and receives $150 a week in gross income. He earns approximately another $100 a week in tips. His combined pre-tax income is, therefore, $13,000. After exemptions and deductions the figure he uses to calculate his taxes is $5,550. The figure is known as Neil's ________?

Taxable income

According to the ability to pay principle of taxation, people who have higher incomes should pay a larger share of their income in tax.

True

It is financially beneficial to save your money in a bank rather than let your employer withhold more taxes than you think you will owe for the year.

True

The federal agency that collects taxes is the Internal Revenue Service.

True

The law that requires workers to contribute to social security and Medicare is the Federal Insurance Contributions Act.

True

The people whom you support financially, such as children, are dependents.

True

Your W-4 helps your employer know how much to withhold from your pay.

True

By January 31 each year every U.S. employer must provide each of its employees with a summary of his or her earnings and withholding's. Employees then use and enclose a copy of this form with their tax forms in reporting their individual taxes. This form is known as?

W-2

After completing her course work at a business college, Yvonne applied for work as an administrative assistant at several companies. She obtained a job with a marketing research company, and today is her first day on the job. She is scheduled to meet with the Human Resource Manger and complete some additional forms and paperwork. What form will she complete that will provide her new employer with the information it will need to deduct the proper amount of withholding's from her paychecks?

W-4

Victor has been attending a plumbing trade school and will graduate next month. Before he graduates, he will pay to take his plumbing certification exam. In paying for the exam and his plumbing certification, the type of tax Victor must pay is an_________.

business/ license tax

State and local governments regulate?

drivers' licenses, building permits, business licenses

A specified amount that you can subtract from your income for each person you support before calculating your taxes is an_____.

exemption

Tien is a single, 20 year-old male with no children and shares an apartment with his best friend. His net income is approximately $15,000 per year. He owns no property or stocks and has earned only $200 interest on his savings account. Which income tax form would he most likely use to report his taxes to the IRS?

form 1040 EZ

If less income is withheld from your pay than is indicates that you owe on the tax table, then you ________ some additional taxes.

owe

Thalia recently purchased a home. Prior to finalizing the deal, her city government appraised the value of the home and determined the tax she will pay. this tax will be used by local governments and school districts. This tax is known as ________.

property tax

If more tax is withheld from your pay than is indicated that you owe on the tax scheduled, than you are due an________?

refund

Employers must withhold from your paycheck?

social security taxes