Chapter 7 Test Personal Finance

Filing Status

affects how much you will pay in taxes

Out income tax system is based on compliances

all citizens are expected to prepare and file income tax returns

Tax Credit

an amount subtracted directly from the tax owed, Its for college tuition, and child care

Exemptions

an amount you may subtract from your income for each person who depends on your income to live

Taxable Income

compute tax that you owe

Deductions

expenses the law allows you to subtract from your adjusted gross income to determine your taxable income

Itemize

lots of medical, dental expenses, gifts, property damage

3 forms 1040EZ

no dependents and less then $50,000 you may use it for single or married and claims no dependents

Standard Deduction

stated amount that you may subtract from adjusted gross income instead of itemizing your deductions

Adjusted Gross Income

take away deductions, exemptions

1040A

with dependents, and certain deductions and still less than $50,000

W-4

Zero Exemption- holds out most money

Gross Income

Form W-2= the form your employer must give you by January 31

Math Minutes

Gross Income Adjustments Adjustments Gross Income Exemptions Taxable Income Tax Credit

Returns have to be filed by

April 15

IRS two main functions

Collect income taxes Enforce tax laws

6 Blue Heading

Filing Status Exemptions Gross Income Adjusted Gross Income Taxable Income Tax Credit