Econ Chapter 3
which taxes are based on the value of land and buildings?
property
you must provide more than __% of the dependents support
50
___ is a tax on wages to fund old-age, survivor, and disability income benefits by the federal gov't
social security
accelerating deductions to save taxes this year is a ___ strategy.
tax avoidance
delaying the receipt of income because you want to delay the payment of taxes until next year is a ___ strategy.
tax avoidance
salary and wages are reported on...
w-2 forms
if you cannot pay your taxes to the IRS, you should not ______ before filing your taxes
wait until you have the money
widow/widower status is for an individual whose spouse has died within the past __ years and who has a ___.
2, dependent
these are ADJUSTMENTS to gross income (before you calculate taxable income):
IRA contributions, Keogh plans, and penalties for early withdrawal of savings
when a husband and wife file a joint return, the income of them is ...
added together
gross income decreased by IRA contributions, alimony, and other adjustments is..
adjusted gross income
IRA contributions are an ___ to income
adjustment
you should pay your fair share of taxes while taking advantage of ___
appropriate tax benefits
these are types of properties upon which PERSONAL property taxes can be assessed:
automobiles, boats, furniture, and farm equipment
these are included in your gross income:
commissions, wages, salaries, and interest
which is the simplest audit?
correspondence
what is the simplest type of IRS audit?
correspondence audit
a dependent must not ____ unless he is under age 19 or a full time student under 24
earn more than a set amount
a tax imposed on the value of a person's property upon that person's death is called an
estate tax
which is the most complex audit?
field audit
a ___ account allows you to reduce your taxable income when paying for medical expenses or child care costs
flexible spending account
charitable donations, personal property taxes, and mortgage interest are ___ deductions
itemized
tax avoidance means using ____ strategies to reduce taxes
legit
these are the goals of tax planning:
maintaining appropriate tax records, making purchases/investments that reduce tax liability, and understanding how tax laws impact you
what type of loan are not good for a tax payer?
refund anticipation loans
these are types of invest income:
rent from investments, interest, and dividends
these are job-related expenses that can be deducted:
union dues, cost of required continued education, and unreimbursed job travel
who offers non-profit tax services?
universities
what happens when you file for an automatic extension by the 4868 form?
your deadline for filing is extended by 6 months
a tax ___ reduces the tax due directly, it does not reduce the taxable income.
credit
tax___ means using illegal means to lower tax liability
evasion
what has tax deductible interest?
home mortgages
what is the difference between a traditional IRA and a Roth IRA?
the Roth IRA contribution is not tax deductible, but after 5 years, its earnings are tax free
how long should home ownership documents be kept for?
indefinite time
an example of tax exempt income is the interest from most ___ bonds.
municipal
taxpayers pay income taxes through payroll ___ and through estimated tax___
withholding, payments
tax planning activity for february would be to check for all of W-2 forms (wages and salary) and ___ forms (interest and dividends)
1099
what are the major categories of taxes on?
purchases, property, wealth, and earnings
___ are imposed by federal, some state, and some local gov't to fund government operations
income taxes
two main types of taxed on wages and salary are fed and state ___ and social security tax
income tax
tax-___ income is not subject to tax, while tax-___ income will be taxed at a later date.
exempt, deferred
an example of tax-defferred income is an
IRA
tax planning activities of december would be deciding whether payments would be to your advantage for this year while __ income into the next tax year
deferring
which donates can be considered a delectable charitable donation?
donating money to church, donating furniture and appliances to good will, and donating money to your college's endowment association
a dependent must be under ___ years old if a full time student
24
the tax rate that is used to calculate the tax on the last (or next) dollar of taxable income is...
a marginal tax rate
why do planners adive people contribute as much as possible to Keogh or 401k plan?
contributions reduce adjusted gross income and therefore reduce taxes and the value accumulates tax free until funds are withdrawn
a tax ___ is an amount subtracted from adjusted gross income to arrive at taxable income
deduction
a tax ___ reduces taxable income, thereby reducing the lax liability
deduction
components of income are:
earned, investment, and passive income
what are adjustments to gross income?
keogh plans, ira contributions, and penalties for early withdrawal of savings
this is NOT a recent change in tax strategy:
mortgage interest deduction
___ is not a job related deductable expense
moving expenses
components of income include earned, investment, and ___
passive income
this allows workers to take home more pay by the gov't:
pay roll tax
a dependent must ___ (even away at college), or be a specified relative and meet citizenship requirements
reside in your home
these are examples of earned income:
salary, wages, and commisions
these are recent tax strategy changes:
saver's credit, increased child tax credit, and increased earned-income credit
which events might cause a tax payer to make estimated tax payments?
significant earnings from savings or investments, earnings from independent contracting, lump sum payments from pensions, and royalties
you calculate taxable income by reducing gross income by adjustments, exemptions, and ____ tax deductions.
standard/itemized
if you are in the 28% bracket and owe 20,000 on 100,000 of taxable income, your avg tax rate and marginal tax rate would be:
20% for avg and 28% for marginal
