1.4 Taxable And Nontaxable Income

Question 1

How is a DEDUCTION different than an EXCLUSION?

Answer 1

Deductions (and credits) sometimes get “phased out” as a taxpayer’s gross income increases.

Question 2

How is an EXCLUSION different from a DEDUCTION?

Answer 2

Excluded income DOESN’T CHANGE; it stays constant. Most exclusions don’t have to be reported on the tax return, with the exception of municipal bonds.

Question 3

Taxable Alimony, disability benefits, retirement income, investment income, interest and dividends, are all examples of ________?

Answer 3

UNEARNED Income

Question 4

FICA taxes are collected on____?

Answer 4

EARNED Income

Question 5

Social Security and Medicare taxes are deducted from ______?

Answer 5

EARNED Income

Question 6

Wages, salaries, tips, professional fees, self employment income, are examples of______?

Answer 6

EARNED Income

Question 7

When income is made AVAILABLE to the taxpayer and can be taxed, is known as______?

Answer 7

Constructive Receipt

Question 8

A payroll tax is also known as_____?

Answer 8

FICA tax

Federal Insurance Contribution Act

Question 9

A self-employed taxpayer must file a tax return and report their earnings to the IRS if their earnings were ___?

A) More than $1000
B) More than $20
C) More than $400
D) More than $100

Answer 9

C

Question 10

Self Employed taxpayers report their income, if more than $600, on which form?

Answer 10

1040 - NEC, Schedule C

Question 11

Farmers and fishermen use which schedule on Form 1040 to report earnings, profits and loss?

Answer 11

Schedule F