Chapter 4 Flashcards
- A married person at the end of the year
- Doesn’t file a joint return
- Provides more that half the costs of maintaining his home for the entire year, and this home is the principal residence for a child
- The taxpayer lived apart from the other spouse for the last six months of the year– not temporary due to illness, education, business, vacation or military service
abandoned spouse
Gross income less deductions for AGI. AGI is an important reference point that is often use in other tax calculations.
adjusted gross income
Definition of income that says that gross income means all income form whatever source
all-inclusive income concept
A tax of a broader tax base that the base for the “regular” tax; the additional tax paid when the tentative minimum tax exceeds the the regular tax. Is designed to require taxpayers to pay some minimum level of tax even when they have low or no regular taxable income as a result of certain tax breaks in the tax code
alternative minimum tax
A type of income that is treated differently for tax purposes from other types of income. Common income characters include ordinary, capital and qualified.
character of income
Amounts that are subtracted from gross income in calculating taxable income
deductions
for AGI deductions or deductions subtracted from gross income to determine AGI
deductions above the line
from AGI deductions or deductions subtracted from AGI to calculate taxable income
deductions below the line
Realized income that will be taxed as income in a subsequent year
deferrals
Quarterly tax payments that a taxpayer makes to the government if that tax withholding is insufficient to meet the taxpayer’s tax liability
estimated tax payments
Realized income that taxpayers permanently exclude from taxation
exclusions
Places taxpayers into one of five categories (e.g. married filing jointly, married filing separately, qualifying widow or widower, head of household and single) by marital status and family situation as of the end of the year
filing status
Deductions that are subtracted from gross income to determine AGI
for AGI deductions
Deductions subtracted from AGI to calculate taxable income
from AGI deductions
realized income minus excluded and deferred income
gross income
- Unmarried as of the end of the year
- Pays more that half of the cost to maintain a household for a qualifying person who lives with the taxpayer for more than half the year
- Pays more than half the costs to maintain a household for a parent who qualifies as a taxpayer’s dependent
head of household
certain types of expenditures that Congress allows taxpayers to deduct as from AGI deductions
itemized deductions
the concept that taxpayers receive certain tax benefits only because Congress writes laws that allow taxpayers to receive the tax benefits
legislative grace
A taxpayer may file jointly if
- he is legally married as of the end of the year
- one spouse died during the year and the surviving spouse did not remarry
- Both spouses agree to jointly file
married filing jointly
When married couples file separately, each spouse reports the income they received during the year and the deductions they paid on a tax return separate from the other spouse
married filing separately
a tax rate that is lower than the tax rate applied to ordinary income
preferential tax rate
income taxed at a preferential rate such a long-term capital gains and qualified dividends
preferentially taxed income
an individual who qualifies as a dependent of a taxpayer by meeting a relationship, age, residence and support test with respect to the taxpayer
qualifying child
an individual who is not a qualifying child of another taxpayer and who meets a relationship, support and gross income test and thus qualifies to be a dependent of another taxpayer
qualifying relative
