Finances Ch. 3

owe $3050

A person with a total tax liability of $8,850 and withholding of federal taxes of $5,800 would:

social security taxes

taxes on earnings that fund old age survivor and disability insurance benefits are called

$14,000

the maximum amount that an individual can give another in a year without being subject to estate taxes is

$10,250

Janet is completing her federal income taxes for the year and has identified the amounts listed here. How much can she rightfully deduct?

Subtract his itemized deductions.

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?

$350

Michel Barbour is considering an additional charitable contribution of $1250 to a tax deductible charity, bringing her total itemized deductions to $12,000. If Michelle is in a 28 percent tax bracket, how much will this $1,2500 contribution reduce her taxes?

Average tax rate

The tax based on the total tax due divided by taxable income is called the

AMT

The tax designed to ensure that those who receive tax breaks also pay their fair share of taxes is called

income tax

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

$3,130

Using the following table, calculate the taxes for an individual with taxable income of $23,800 8800-3600=15%

$10,690

Using the following table, calculate the taxes for an individual with taxable income of $62,000

real estate property tax

What are the main sources of revenue for local governments?

His 20 year old son who is working full-time and living in an apartment

When Paul completes his taxes, he can include all of the following as exemptions except

earned income credit

When calculating federal income taxes, "gross income" includes all of the following categories except

Alimony

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

domestic tax credit

Which of the following is NOT a tax credit?

1040Z

Which of the following is NOT a valid form for filing federal income taxes?

you are an independent contractor

You may be required to make estimated tax payments if

$230

a tax credit of $230 for a person in a 28 percent tax bracket would reduce a person's taxes by:

charity contributions

adjustments to income include all of the following except

$2413.00

an itemized deduction of $6350 with a 38 percent tax rate would reduce a person's taxes by

10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

in 2017 the U.S. federal tax tables included tax rates of

tax-exempt income

income that is not subject to tax is called

tax-deffered income

income that is taxed at a later date is

$4,050

In 2017, taxable income was reduced by__________for each exemption claimed.

Excise tax

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

estate tax

A tax imposed on the value of a person's property at the time of death is called a(n)

1099

At the end of the year, Walter received a form that showed his payments from independent contracting. That form is called _____

W-2

At the end of the year, Xavier received a form from his employer that reports annual earnings and the amounts deducted for taxes. That form is called a _____

1099

At the end of the year, Yvonne received a form from her bank that reported income from her savings. That form is called a

W-2

At the end of the year, employees receive a ____ form that reports annual earnings and the amounts deducted for taxes from their employer.

Miscellaneous expenses less than 2% of AGI

Athena wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is NOT a proper deduction?

Qualifying widow or widower

Bob was married to Sandy and they have a 12 year old son. Sandy passed away last year. Bob needs to complete his federal income taxes for the year. What filing status could he use because of his marital status?

earned income

Fees, tips, and bonuses are an example of

6 years

Fred has been completing his own tax returns for years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation?

$46,030

George Washburn has earnings from his salary of $46,200, interest on savings of $1005, a deductible contribution to an IRA on $1,850, and dividends from mutual funds of $675. George's adjusted income would be

passive income

Gross (or total) income includes

Adjusted gross income

Gross income minuss Adjustments to Income equals

6 years

How long should you keep tax documentation from the date you file your return?

$475

If Jack was in a 25% tax bracket and received a $1,900 tax deduction, by how much would his taxes be reduced?

Married, filing joint return

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for Nancy?

4868

Penny knows that she needs to file her taxes, but is unable to do so by April 15. What form does she need to complete to obtain an automatic six-month extension?

1040X

Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?

AMT tax credit

Recent tax credits include all of the following except the

$16,400

Sam and Diane are completing their federal income taxes for the year and have identified the amounts listed here. How much can they rightfully deduct? AGI: 82,000 medical and dental: 9200 state income taxes: 3700 mortgage interest: 10,300 charitable contributions: 1400

Miscellaneous expenses in excess of 2% of AGI

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?

Earned-income credit

Tanya is a single low-income working parent and Fred is a single high-income working parent. Because of her status, Tanya, but not Fred, may be eligible for the

medical and dental expenses

Taxpayers over 65 can only deduct expenses that are greater than 7.5% of adjusted gross income for

inheritance tax

The amount levied on the value of property bequeathed by a deceased person

marginal tax rate

the rate used to calculate the tax due on the next dollar of income is referred to as the