Personal Finance: Federal Income Tax Unit Review

Employee 401(k) contributions via payroll in most cases is a "pre-tax" deduction. This means . . .

the employer deducts this contribution from gross pay before assessing income tax on wages

View the attachment w/ this question. The x in the You box on line 5 means . . .

the taxpayer is being claimed by someone else

The "renters" deduction on the Indiana state return is limited to . . .

the total rent for the year or $3000, whichever is less

Taxpayers receive refunds when . . .

their total tax payments are greater than the total tax

The acronym "IRS" stands for . . .

Internal Revenue Service

Expenses listed on Schedule A that you can subtract from adjusted gross income to determine taxable income

Itemized deductions

The filing status with the lowest tax rate is . . .

Married filing jointly or Qualifying widow(er) w/ dependent child

Which of these is considered a tax credit?

Residential energy improvements

A stated amount you can subtract from adjusted gross income if you itemize deductions

Standard deductions

Which of these expenses cannot be itemized on Schedule A?

Student loan interest

What is reduced by the earned income credit (EIC)?

Tax

Which of these below "reduce your tax amount directly, dollar for dollar"?

Tax Credits

An amount subtracted directly from the tax owed

Tax credit

Which of the list reduces the income that is subject to tax for the taxpayer?

Tax exemptions

The amount on which you will pay income tax

Taxable income

T/F A husband and wife, filing jointly, may claim an exemption for each of themselves.

True

T/F Employers use Form W-4 to report wage and tax information to employees.

True

T/F The higher the standard deduction amount, the lower the taxable income.

True

T/F The standard deduction reduces the income that is subject to tax.

True

A system in which all citizens are expected to prepare and file income tax returns of their own accord without force

Voluntary compliance

Employers report wage, salary, and tip income on Form . . .

W-2

Upon accepting a job offer (Indiana employer), all resident and non resident employees must file which form w/ their employer because their income is subject to state and/or county income tax?

WH-4

The short name for the "Wage and Tax Statement" is . . .

Form W-2

All taxable income you receive, including wages, salaries, an tips

Gross income

The wages an individual earns before taxes and other deductions are taken out is known as . . .

Gross pay`

The deadline for filing federal and state income tax returns is . . .

April 15

A person who lives with you and for whom you pay more than half of his or her living expenses

Dependent

A tax credit for certain people who work and have low to moderate income?

Earned Income Credit

Who completes Form W-4?

Employee

A stated amount ($4050 per dependent for 2016) you may subtract from your adjusted gross income for each dependent you have in your household, including yourself.

Exemption

An amount you may subtract from your income of reach person who depends on your income to live

Exemption

Which of these payroll deductions are mandatory.

- Federal Withholding - Social Security - Medicare

Claiming "Exempt" on your W-4, means . . .

- Last year you had a right to a refund of all federal income tax because you had no tax liability - This year you expect a refund of all federal income tax withheld because you expect to have no tax liability

T/F A student, age 18, working part-time, living at home w/ parents, going to college, can be claimed as a dependent on their parent's return and also claim a personal exemption for themselves (on student return) in the same tax year.

False

.To file as Head of Household, one must be ____________ and pay more than _______ the cost of maintain a home for oneself and another _____________ who lives with that person for over ________ the year and can be claimed as the ______________.

- single - half - person - half - dependent

The federal income tax form often described as the "long form" is the . . .

1040

To "itemize" deductions, the taxpayer must file which form?

1040 w/ Schedule A

T/F All taxpayers with children can claim the earned income credit.

False

T/F The standard deduction amount (for single and married filing jointly) affects the number of exemptions.

False

The tax form used by banks to report interest income to their clients on the year.

1099-INT

A widower can claim the qualifying widow(er) with dependent child filing status for up to how many years after the spouse's death.

2

T/F A tax deduction is more beneficial than a tax credit of the same amount.

False

A tax filing group based on your marial status

Filing Status

Gross income that is less adjustments

Adjusted Gross income

To qualify the the EIC, a single person w/ no children must have adjusted gross income < than $________________.

$14,880