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Questions and Answers
Money collected by the government from various sources is known as __________.
Money collected by the government from various sources is known as __________.
revenue
A tax that increases in proportion to increases in income is known as a(n) _____________ tax.
A tax that increases in proportion to increases in income is known as a(n) _____________ tax.
progressive
Money earned by individuals that is subject to taxation is called __________ income.
Money earned by individuals that is subject to taxation is called __________ income.
taxable
In order to avoid itemizing deductions, a person may elect to take the __________, which is a flat amount.
In order to avoid itemizing deductions, a person may elect to take the __________, which is a flat amount.
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Money paid to a former spouse (which is taxable income) for that person's support is called __________.
Money paid to a former spouse (which is taxable income) for that person's support is called __________.
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Money paid to a former spouse (which is not taxable income) for the support of dependent children is called _________.
Money paid to a former spouse (which is not taxable income) for the support of dependent children is called _________.
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Expenses that can be subtracted from gross income are called ___________.
Expenses that can be subtracted from gross income are called ___________.
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The amount remaining when adjustments are subtracted from gross income is called _____________.
The amount remaining when adjustments are subtracted from gross income is called _____________.
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When all sources of taxable income are added together, the total is called ____________ income.
When all sources of taxable income are added together, the total is called ____________ income.
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An amount that can be subtracted from your income for each person who depends on your income to live is a(n) ____________.
An amount that can be subtracted from your income for each person who depends on your income to live is a(n) ____________.
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A(n) __________ tax allows a higher-income person to pay a lower percentage of income in taxes than a lower-income person.
A(n) __________ tax allows a higher-income person to pay a lower percentage of income in taxes than a lower-income person.
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To intentionally fail to pay taxes owed is to commit a serious crime called __________.
To intentionally fail to pay taxes owed is to commit a serious crime called __________.
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A tax system that is based on _______________ requires all citizens to be responsible for preparing and filing their tax returns on time and paying taxes due.
A tax system that is based on _______________ requires all citizens to be responsible for preparing and filing their tax returns on time and paying taxes due.
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A type of tax for which the rate stays the same regardless of income is called __________.
A type of tax for which the rate stays the same regardless of income is called __________.
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A(n) ___________ is an amount subtracted directly from tax owed.
A(n) ___________ is an amount subtracted directly from tax owed.
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An administrative agency of the federal government that collects taxes and enforces tax laws is the ___________.
An administrative agency of the federal government that collects taxes and enforces tax laws is the ___________.
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An examination of tax returns by the IRS is called a(n) __________.
An examination of tax returns by the IRS is called a(n) __________.
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The income tax is an example of a progressive tax.
The income tax is an example of a progressive tax.
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Unemployment compensation benefits received are taxable to the person who receives them.
Unemployment compensation benefits received are taxable to the person who receives them.
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The power to levy federal income taxes rests with the U.S. Congress.
The power to levy federal income taxes rests with the U.S. Congress.
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You may not use short Form 1040EZ for a joint return if your total taxable income is $20,000 or more.
You may not use short Form 1040EZ for a joint return if your total taxable income is $20,000 or more.
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Only a married person is considered a head of household.
Only a married person is considered a head of household.
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Alimony is taxable to the person receiving it and is deductible to the one paying it.
Alimony is taxable to the person receiving it and is deductible to the one paying it.
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Money received in the form of wages, tips, salaries, or interest is taxable income.
Money received in the form of wages, tips, salaries, or interest is taxable income.
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A taxpayer's filing status is unrelated to his or her marital status.
A taxpayer's filing status is unrelated to his or her marital status.
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The Internal Revenue Service is an agency of the Department of the Treasury.
The Internal Revenue Service is an agency of the Department of the Treasury.
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You can file an amended tax return (1040X) if you discover you made an error.
You can file an amended tax return (1040X) if you discover you made an error.
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To compute your tax liability, turn to the tax tables and look up the amount called __________.
To compute your tax liability, turn to the tax tables and look up the amount called __________.
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Which of these is a form of flat tax?
Which of these is a form of flat tax?
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Tax returns must be filed by __________ of the following year.
Tax returns must be filed by __________ of the following year.
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As an alternative to itemizing deductions, taxpayers may __________.
As an alternative to itemizing deductions, taxpayers may __________.
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A sales tax on specific products and services is the _________ tax.
A sales tax on specific products and services is the _________ tax.
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What is a type of IRS audit requiring a taxpayer to appear in person and bring records?
What is a type of IRS audit requiring a taxpayer to appear in person and bring records?
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For people who use Form 1040EZ or 1040A, the IRS allows __________.
For people who use Form 1040EZ or 1040A, the IRS allows __________.
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Student loan interest and tuition can be listed as ____________ on Form 1040A.
Student loan interest and tuition can be listed as ____________ on Form 1040A.
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Study Notes
Federal Income Tax Concepts
- Revenue: Money collected by the government from various sources.
- Progressive Tax: A tax that increases proportionally with higher income levels.
- Taxable Income: Money earned by individuals that is subject to taxation.
- Standard Deduction: A flat amount that allows taxpayers to avoid itemizing deductions.
- Alimony: Taxable income received from a former spouse for support.
- Child Support: Non-taxable income paid to a former spouse for dependent children's support.
Tax Calculation and Income Definitions
- Deductions: Expenses subtracted from gross income to reduce taxable income.
- Adjusted Gross Income (AGI): Amount remaining after adjustments are made to gross income.
- Gross Income: Total of all sources of taxable income combined.
- Exemption: Amount subtracted from income for each dependent.
Tax Types and Compliance
- Regressive Tax: A system where higher-income individuals pay a lower percentage of their income in taxes.
- Tax Evasion: A serious crime involving intentionally failing to pay owed taxes.
- Voluntary Compliance: Tax system requiring all citizens to prepare and file tax returns responsibly.
- Proportional Tax: Tax rate that remains consistent regardless of income level.
Tax Administration and Regulations
- Tax Credit: Amount that can be subtracted directly from the tax owed.
- IRS (Internal Revenue Service): Federal agency responsible for collecting taxes and enforcing tax laws.
- Audit: Examination of tax returns conducted by the IRS.
Filing and Deadlines
- Progressive Tax Example: The income tax serves as a prominent example of a progressive tax system.
- Taxable Unemployment Benefits: Unemployment compensation benefits received are taxable.
- Filing Deadline: Tax returns must be filed by April 15 of the following year.
- Form 1040EZ Restrictions: May not be used for joint returns if total taxable income is $20,000 or more.
Common Tax-related Statements
- Only married individuals do not hold exclusive status as heads of household.
- Alimony is both taxable for the recipient and deductible for the payer.
- Taxpayer filing status is directly affected by marital status.
- Electronic filing is allowed for Form 1040EZ or 1040A taxpayers.
Specific Tax Provisions
- Adjustments to Gross Income: Expenses like student loan interest and tuition can be claimed.
- Excise Tax: A sales tax levied on specific products and services.
- Office Audit Type: A type of IRS audit that necessitates in-person attendance with records.
Tax Forms
- Amended tax returns can be filed using Form 1040X if errors are discovered.
- Tax liabilities are computed using tax tables based on taxable income.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge of federal income tax concepts with these flashcards based on Chapter 7. Each card provides a term related to tax definitions and principles, enhancing your understanding of tax revenue, types of taxes, and taxable income. Perfect for students or anyone seeking to grasp federal taxation basics.
