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Chapter 7 Review. pp.137-156. Money paid to a former spouse for support of dependent children is called…. Child support. A tax theory that states individuals with high income should pay more taxes than people with low incomes. The ability to pay. Almost all consumption taxes are….

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Chapter 7 Review

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Chapter 7 Review

pp.137-156


Money paid to a former spouse for support of dependent children is called…

  • Child support


A tax theory that states individuals with high income should pay more taxes than people with low incomes.

  • The ability to pay


Almost all consumption taxes are….

  • Regressive


Sales taxes imposed on specific goods and services such as tobacco are…

  • Excise taxes


Excise taxes are …

  • Regressive


Federal taxes provide funds for…

  • Congress

  • National defense

  • Highways

  • Wildlife refuges

  • Welfare

  • Foreign aid


Taxes for which the rate stays the same regardless of income are….

  • Proportional Taxes


Federal Income tax is an example of …

  • Progressive tax


How does a revenue bill become a law?

  • It must pass a vote in both the House and Senate and then be signed by the President.


The government spends_______ according to priorities set by congress.

  • revenue


What are the main functions of the IRS?

  • Collect Income taxes

  • Enforce tax laws


Who has the power to levy taxes?

  • Congress


Money received from working…

  • Earned income


What is a tax bracket?

  • Ranges of income


When the government spends more than it receives in revenue it has a…

  • Deficit/shortage


Another name for proportional taxes are…

  • Flat taxes


These types of taxes take a smaller portion of your income as your income grows…

  • Regressive taxes


The idea that citizens are expected to prepare and file tax returns of their own accord without force is referred to as…

  • Voluntary Compliance


IRS stands for…

  • Internal Revenue Service


Who pays taxes?

  • Businesses

  • Individuals


Sales tax is an example of this kind of tax…

  • Regressive


A person who lives with you and for whom you pay more than half of their living expenses….

  • dependent


Willful failure to pay taxes is called…

  • Evasion


Property tax is an example of this kind of tax….

  • Proportional/flat


The punishment for not paying taxes is..

  • Fine

  • Imprisonment

  • both


These types of taxes take a larger portion of your income as your incomes grows.

  • Progressive taxes


An examination of your tax returns by the IRS is an…

  • Audit


Which tax form must you fill out if you want to itemize deductions?

  • 1040A


Our tax system is graduated. What does this mean?

  • Tax rates increase as taxable income increases


Money paid to a former spouse is called…

  • alimony


In this type of audit the taxpayer sits down with the auditor to answer questions and produce records.

  • Office


You are allowed to subtract some types of spending from your gross income to determine your…

  • Adjusted gross income


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.

  • Correspondence


In this type of audit, the IRS agent visits the taxpayers home or business to examine records.

  • Field


This is based on your marital status as of the last day of the tax year…

  • Filing status


Give an example of filing status…

  • Single

  • Married filing a joint return

  • Married filing a separate return

  • Head of Household

  • Qualifying widow


Where do W-2’s come from?

  • Each employer you had for the year


The amount of money you may subtract from your income for each person who depends on your income.

  • Exemption


If you are filing a joint return you can take an exemption for your…..

  • spouse


What kind of information is on the W-2?

  • Salaries

  • Wages

  • Tips

  • Taxes withheld


Most new tax payers use one of two forms, what are they?

  • 1040EZ

  • 1040A


An example of earned income is…

  • Wages

  • Salary

  • Tips


An example of unearned income is…

  • Interest

  • Dividends

  • Alimony

  • Unemployment

  • Workers compensations

  • Scholarships

  • Grants


Give an example of income that is not taxable…

  • Non-taxable income

    • Child support

    • Gifts

    • Inheritances

    • Life Insurance benefits

    • Veterans benefits


All taxable income received…

  • Gross Income


What is the difference between a tax credit and a tax deduction?

  • Tax deduction is subtracted from adjusted gross income

  • Tax credit is subtracted from what you owe


Money you received from a passive activity…

  • Unearned income


Expenses you can subtract from adjusted gross income to determine your taxable income are…

  • Itemized deductions


Instead of itemizing your deductions you can take the…..

  • Standard deduction


A stated amount you may subtract form adjusted gross income is…

  • Standard deduction


Income on which you pay tax…

  • Taxable income


Amount subtracted directly from the tax owed…

  • Tax credit


When must you file your taxes by?

  • April 15


How long should you keep copies of your tax returns and related documents?

  • 6 years


Local taxes provide funds for…

  • Education

  • Parks

  • Roads

  • Police, fire, health departments


Study!!!!!!


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