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Chapter 7 Reviewpp.137-156
Child support
Money paid to a former spouse for support of dependent children is called…
The ability to pay
A tax theory that states individuals with high income should pay more taxes than people with low incomes.
Regressive
Almost all consumption taxes are….
Excise taxes
Sales taxes imposed on specific goods and services such as tobacco are…
Regressive
Excise taxes are …
Congress National defense Highways Wildlife refuges Welfare Foreign aid
Federal taxes provide funds for…
Proportional Taxes
Taxes for which the rate stays the same regardless of income are….
Progressive tax
Federal Income tax is an example of …
It must pass a vote in both the House and Senate and then be signed by the President.
How does a revenue bill become a law?
revenue
The government spends_______ according to priorities set by congress.
Collect Income taxes Enforce tax laws
What are the main functions of the IRS?
Congress
Who has the power to levy taxes?
Earned income
Money received from working…
Ranges of income
What is a tax bracket?
Deficit/shortage
When the government spends more than it receives in revenue it has a…
Flat taxes
Another name for proportional taxes are…
Regressive taxes
These types of taxes take a smaller portion of your income as your income grows…
Voluntary Compliance
The idea that citizens are expected to prepare and file tax returns of their own accord without force is referred to as…
Internal Revenue Service
IRS stands for…
Businesses Individuals
Who pays taxes?
Regressive
Sales tax is an example of this kind of tax…
dependent
A person who lives with you and for whom you pay more than half of their living expenses….
Evasion
Willful failure to pay taxes is called…
Proportional/flat
Property tax is an example of this kind of tax….
Fine Imprisonment both
The punishment for not paying taxes is..
Progressive taxes
These types of taxes take a larger portion of your income as your incomes grows.
Audit
An examination of your tax returns by the IRS is an…
1040A
Which tax form must you fill out if you want to itemize deductions?
Tax rates increase as taxable income increases
Our tax system is graduated. What does this mean?
alimony
Money paid to a former spouse is called…
Office
In this type of audit the taxpayer sits down with the auditor to answer questions and produce records.
Adjusted gross income
You are allowed to subtract some types of spending from your gross income to determine your…
Correspondence
In this type of audit the IRS sends a letter, asking the taxpayer to respond to specific questions or produce evidence of deductions or other entries on the tax return.
Field
In this type of audit, the IRS agent visits the taxpayers home or business to examine records.
Filing status
This is based on your marital status as of the last day of the tax year…
Single Married filing a joint return Married filing a separate return Head of Household Qualifying widow
Give an example of filing status…
Each employer you had for the year
Where do W-2’s come from?
Exemption
The amount of money you may subtract from your income for each person who depends on your income.
spouse
If you are filing a joint return you can take an exemption for your…..
Salaries Wages Tips Taxes withheld
What kind of information is on the W-2?
1040EZ 1040A
Most new tax payers use one of two forms, what are they?
Wages Salary Tips
An example of earned income is…
Interest Dividends Alimony Unemployment Workers compensations Scholarships Grants
An example of unearned income is…
Non-taxable income◦ Child support◦ Gifts◦ Inheritances◦ Life Insurance benefits◦ Veterans benefits
Give an example of income that is not taxable…
Gross Income
All taxable income received…
Tax deduction is subtracted from adjusted gross income
Tax credit is subtracted from what you owe
What is the difference between a tax credit and a tax deduction?
Unearned income
Money you received from a passive activity…
Itemized deductions
Expenses you can subtract from adjusted gross income to determine your taxable income are…
Standard deduction
Instead of itemizing your deductions you can take the…..
Standard deduction
A stated amount you may subtract form adjusted gross income is…
Taxable income
Income on which you pay tax…
Tax credit
Amount subtracted directly from the tax owed…
April 15
When must you file your taxes by?
6 years
How long should you keep copies of your tax returns and related documents?
Education Parks Roads Police, fire, health departments
Local taxes provide funds for…
Study!!!!!!
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