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Understanding Child Support and Tax Systems: A Comprehensive Overview

This chapter explores various aspects of child support, tax systems, and their implications on individuals. It discusses the definitions and differences between child support, taxes, and income types. Key tax concepts such as progressive, regressive, proportional, and flat taxes are explained. The chapter also covers tax compliance, audit types, and the importance of filing statuses. Additionally, it highlights various forms of income, including earned and unearned income, and how exemptions, deductions, and credits function within the tax framework.

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Understanding Child Support and Tax Systems: A Comprehensive Overview

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  1. Chapter 7 Review pp.137-156

  2. Money paid to a former spouse for support of dependent children is called… • Child support

  3. A tax theory that states individuals with high income should pay more taxes than people with low incomes. • The ability to pay

  4. Almost all consumption taxes are…. • Regressive

  5. Sales taxes imposed on specific goods and services such as tobacco are… • Excise taxes

  6. Excise taxes are … • Regressive

  7. Federal taxes provide funds for… • Congress • National defense • Highways • Wildlife refuges • Welfare • Foreign aid

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

  9. Federal Income tax is an example of … • Progressive tax

  10. 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.

  11. The government spends_______ according to priorities set by congress. • revenue

  12. What are the main functions of the IRS? • Collect Income taxes • Enforce tax laws

  13. Who has the power to levy taxes? • Congress

  14. Money received from working… • Earned income

  15. What is a tax bracket? • Ranges of income

  16. When the government spends more than it receives in revenue it has a… • Deficit/shortage

  17. Another name for proportional taxes are… • Flat taxes

  18. These types of taxes take a smaller portion of your income as your income grows… • Regressive taxes

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

  20. IRS stands for… • Internal Revenue Service

  21. Who pays taxes? • Businesses • Individuals

  22. Sales tax is an example of this kind of tax… • Regressive

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

  24. Willful failure to pay taxes is called… • Evasion

  25. Property tax is an example of this kind of tax…. • Proportional/flat

  26. The punishment for not paying taxes is.. • Fine • Imprisonment • both

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

  28. An examination of your tax returns by the IRS is an… • Audit

  29. Which tax form must you fill out if you want to itemize deductions? • 1040A

  30. Our tax system is graduated. What does this mean? • Tax rates increase as taxable income increases

  31. Money paid to a former spouse is called… • alimony

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

  33. You are allowed to subtract some types of spending from your gross income to determine your… • Adjusted gross income

  34. 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

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

  36. This is based on your marital status as of the last day of the tax year… • Filing status

  37. Give an example of filing status… • Single • Married filing a joint return • Married filing a separate return • Head of Household • Qualifying widow

  38. Where do W-2’s come from? • Each employer you had for the year

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

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

  41. What kind of information is on the W-2? • Salaries • Wages • Tips • Taxes withheld

  42. Most new tax payers use one of two forms, what are they? • 1040EZ • 1040A

  43. An example of earned income is… • Wages • Salary • Tips

  44. An example of unearned income is… • Interest • Dividends • Alimony • Unemployment • Workers compensations • Scholarships • Grants

  45. Give an example of income that is not taxable… • Non-taxable income • Child support • Gifts • Inheritances • Life Insurance benefits • Veterans benefits

  46. All taxable income received… • Gross Income

  47. 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

  48. Money you received from a passive activity… • Unearned income

  49. Expenses you can subtract from adjusted gross income to determine your taxable income are… • Itemized deductions

  50. Instead of itemizing your deductions you can take the….. • Standard deduction

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