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!!!!!!