Questions and Answers
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.
progressive
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.
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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 _________.
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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 _____________.
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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) ____________.
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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.
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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.
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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.
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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) __________.
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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.
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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.
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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.
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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.
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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.
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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?
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Tax returns must be filed by __________ of the following year.
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As an alternative to itemizing deductions, taxpayers may __________.
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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?
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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.
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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
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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.
