Ramsey Chapter 10 Lesson 4 Tax Filing
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Questions and Answers

What is the standard deduction?

  • A tax credit available for all taxpayers
  • The total amount of taxable income
  • A form used exclusively by employers
  • The dollar amount people can subtract from their income before the tax is calculated (correct)

    • What is a tax schedule?

    A special tax form to report certain types of income or deductions.

    What are itemized deductions?

    A list of all eligible expenses that can be claimed to decrease taxable income.

    What is a tax credit?

    <p>An amount of money a taxpayer can subtract from the taxes they owe.</p> Signup and view all the answers

    What is an audit?

    <p>An official IRS inspection of a tax return to make sure the income and deductions are accurate.</p> Signup and view all the answers

    What does a W-2 form summarize?

    <p>An employee's earnings and withholdings for the year sent to the taxpayer by the employer.</p> Signup and view all the answers

    What is represented by the 1099-MISC form?

    <p>Shows the sum of payments received from miscellaneous income (outside regular job).</p> Signup and view all the answers

    What is the 1040 form?

    <p>An income tax return form filled out by an individual and filed with the IRS.</p> Signup and view all the answers

    What does the IRS stand for?

    <p>Internal Revenue Service.</p> Signup and view all the answers

    What is the Head of Household status?

    <p>Special status for unmarried taxpayers who support other people besides themselves and their children.</p> Signup and view all the answers

    What is a Joint Return?

    <p>A return combining the income, exemptions, credits, and deductions of a husband and wife.</p> Signup and view all the answers

    What does FICA stand for?

    <p>Federal Insurance Contributions Act.</p> Signup and view all the answers

    What is Income Tax Withholding?

    <p>Income tax deducted from an employee's gross pay.</p> Signup and view all the answers

    Study Notes

    Key Tax Terms and Definitions

    • Standard Deduction: A fixed dollar amount subtracted from total income, reducing taxable income.
    • Tax Schedule: A specific form for reporting various income types or deductions for tax purposes.
    • Itemized Deductions: A detailed list of deductible expenses that lower taxable income, offering potential for a larger tax benefit compared to the standard deduction.
    • Tax Credit: A direct reduction in the amount of tax owed, resulting in overall tax savings for the taxpayer.

    Tax Forms and Their Purposes

    • W-2 Form: Summarizes an employee's total earnings and tax withholdings for the year, provided by the employer to the employee for filing taxes.
    • 1099-MISC Form: Reports miscellaneous income received outside of traditional employment, detailing non-employee compensation.
    • 1040 Form: Primary income tax return form for individuals to report income details and calculate taxes owed for the year.

    Tax Administration and Processes

    • IRS (Internal Revenue Service): The federal agency tasked with overseeing tax collection and enforcement, ensuring compliance with tax laws.
    • Audit: A rigorous examination by the IRS assessing the accuracy of a taxpayer's reported income and deductions.

    Tax Filing Statuses

    • Head of Household: A specific filing status for unmarried individuals supporting others, allowing for potential tax advantages.
    • Joint Return: A tax return that combines the financial details of married couples, offering shared credits and deductions.

    Employment Tax Information

    • FICA: A mandatory payroll tax shared between employers and employees, funding Social Security and Medicare programs.
    • Income Tax Withholding: The practice of deducting estimated income tax from an employee's paycheck, ensuring tax is prepaid throughout the year.

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    Description

    This quiz covers key terms related to filing income taxes as outlined in Chapter 10, Lesson 4 of the Ramsey textbook. It includes important concepts such as standard deduction, tax schedule, and itemized deductions, helping you understand how to manage your taxes effectively.

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