Chapter 4

Question 1

1. A married person at the end of the year
2. Doesn’t file a joint return
3. Provides more that half the costs of maintaining his home for the entire year, and this home is the principal residence for a child
4. 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

Answer 1

abandoned spouse

Question 2

Gross income less deductions for AGI. AGI is an important reference point that is often use in other tax calculations.

Answer 2

adjusted gross income

Question 3

Definition of income that says that gross income means all income form whatever source

Answer 3

all-inclusive income concept

Question 4

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

Answer 4

alternative minimum tax

Question 5

A type of income that is treated differently for tax purposes from other types of income. Common income characters include ordinary, capital and qualified.

Answer 5

character of income

Question 6

Amounts that are subtracted from gross income in calculating taxable income

Answer 6

deductions

Question 7

for AGI deductions or deductions subtracted from gross income to determine AGI

Answer 7

deductions above the line

Question 8

from AGI deductions or deductions subtracted from AGI to calculate taxable income

Answer 8

deductions below the line

Question 9

Realized income that will be taxed as income in a subsequent year

Answer 9

deferrals

Question 10

Quarterly tax payments that a taxpayer makes to the government if that tax withholding is insufficient to meet the taxpayer’s tax liability

Answer 10

estimated tax payments

Question 11

Realized income that taxpayers permanently exclude from taxation

Answer 11

exclusions

Question 12

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

Answer 12

filing status

Question 13

Deductions that are subtracted from gross income to determine AGI

Answer 13

for AGI deductions

Question 14

Deductions subtracted from AGI to calculate taxable income

Answer 14

from AGI deductions

Question 15

realized income minus excluded and deferred income

Answer 15

gross income

Question 16

1. Unmarried as of the end of the year
2. 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
3. Pays more than half the costs to maintain a household for a parent who qualifies as a taxpayer’s dependent

Answer 16

head of household

Question 17

certain types of expenditures that Congress allows taxpayers to deduct as from AGI deductions

Answer 17

itemized deductions

Question 18

the concept that taxpayers receive certain tax benefits only because Congress writes laws that allow taxpayers to receive the tax benefits

Answer 18

legislative grace

Question 19

A taxpayer may file jointly if

1. he is legally married as of the end of the year
2. one spouse died during the year and the surviving spouse did not remarry
3. Both spouses agree to jointly file

Answer 19

married filing jointly

Question 20

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

Answer 20

married filing separately

Question 21

a tax rate that is lower than the tax rate applied to ordinary income

Answer 21

preferential tax rate

Question 22

income taxed at a preferential rate such a long-term capital gains and qualified dividends

Answer 22

preferentially taxed income

Question 23

an individual who qualifies as a dependent of a taxpayer by meeting a relationship, age, residence and support test with respect to the taxpayer

Answer 23

qualifying child

Question 24

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

Answer 24

qualifying relative

Question 25

Applies for up to two years after the year in which the taxpayer’s spouse dies as long as the taxpayer remains unmarried and maintains a household for a dependent child

Answer 25

qualifying widow or widower

Question 26

Social Security and Medicare taxes paid by the self-employed on a taxpayer’s net earnings form self-employment

Answer 26

self-employment taxes

Question 27

A taxpayer files as single if he is unmarried as of the end of the year and does not qualify for any of the other filing statues

Answer 27

single

Question 28

a fixed deduction offered in lieu of itemized deductions. The amount of the standard deductions depends on the taxpayer’s filing status

Answer 28

standard deduction

Question 29

items that directly reduce a taxpayer’s tax liability

Answer 29

tax credits

Question 30

a schedule of progressive tax rates and the income ranges to which the rates apply that taxpayers may use to compute their gross tax liability

Answer 30

tax rate schedule

Question 31

IRS provided tables that specify the federal income tax liability for individuals with taxable income within a specific range

Answer 31

tax tables

Question 32

taxes collected and remitted to the government by an employer from and employee’s wages

Answer 32

withholdings