Introduction

Question 1

Progressive Tax Rates

Answer 1

Ranges from 10% to 37%

As a taxpayer’s taxable income goes up, the last dollar of tax is taxed at the higher amount

Question 2

Filing Status Options

Answer 2

(1) Unmarried
(2) Married Filing Jointly
(3) Married Filing Separately
(4) Head of Household
(5) Qualifying Widow

Question 3

Filing Requirements

Answer 3

Generally, taxpayer must file a return when gross income > amount of standard deductions

Otherwise, taxpayer may choose to file tax return merely to receive a refund of withheld taxes

Question 4

Self-Employed Individuals

Answer 4

Self-employed individuals must pay self-employment taxes as well as estimated income taxes four times a year

Question 5

Gross Income

Answer 5

All income from whatever source derived

Question 6

Adjusted Gross Income

Answer 6

Gross income - Certain Deductions

Dividing line between deductions allowed to taxpayers regardless of whether they itemize (above-the-line deductions) and deductions that may be taken only if taxpayer itemizes (below-the-line deductions)

Question 7

Above-the-Line Deductions

Answer 7

Subtracted from gross income when computing AGI

Ex: contributions to health savings account

Question 8

Below-the-Line (Itemized) Deductions

Answer 8

Subtracted from AGI when computing taxable income and may be subject to limitations based on taxpayer’s AGI

Question 9

Standard Deduction

Answer 9

Instead of itemizing below-the-line deductions, taxpayer may elect to deduct fixed amount, standard deduction, set annually by IRS

Question 10

Tax Credits

Answer 10

Provide dollar-for-dollar reduction in actual tax liability