Personal Taxation Flashcards
What 5 states don’t charge tax?
Alaska, Delaware, Montana, New Hampshire & Oregon
Where are the 4 main places we pay taxes?
Purchases, property, wealth, & earnings.
Excise tax-
federal &/or state tax on specific goods like gas,tires, airfare & cigarettes
Estate taxes-
Taxes levied on a persons estate when that person dies. To do this the government takes the market value of the persons property, investments, & other parts of the estate & imposes a tax on the overall estate value.
Inheritance taxes-
government imposed on property or assets that are passed on after someone has died & bequeathed the assets to another.
Income taxes-
Imposed on the amount of money that each person earns during a calendar year.
When did the government begin collecting income tax?
In 1913 after the 16th amendment was passed.
Progressive tax systems-
require those with higher incomes to pay a greater proportion of their income taxes. The more income people make the greater the proportion of their income will go toward taxes relative to those with lower income.
Regressive tax systems-
Charge everyone the exact same percentage, amount, or proportion in taxes.
What is the overall tax structure in the U.S.?
a progressive system. It currently uses tax brackets as a part of its progressive tax system.
Internal Revenue Service-
Collects federal income taxes, also interprets tax Laws & clarifying confusing aspects for citizens.
What is the Internal Revenue Code?
A collection of tax laws, their interpretations, & federal tax rulings.
How to file a tax return-
1- calculate your income
2- figure out adjusted gross income
3-calculate how many taxes you owe
4-determine whether you qualify for any tax credits
Gross income-
All sources of income.
What forms if income aren’t included in the calculation of gross income?
Scholarships, disability income, welfare, inheritances, or child support.
Adjusted gross income-
Gross income minus specific deductions.
Standard deduction-
An amount subtracts from your adjusted gross income based on your filing status.
exemptions-
Affect the amount of taxes that people pay. They are deducted from the adjusted gross income for each eligible person within the household including the person filing taxes & any dependable children.
Alternative Minimum Tax-
makes sure those with higher incomes pay their fair share of taxes even if they have a large number of dedications that take their adjusted gross income into a lower tax bracket.
Tax credits-
Reduce your taxes by the actual amount
Deductions-
Subtracted from the gross income. (May result in a Lower tax bracket) but overall effect on taxes owed is generally less than of a tax credit.
EIC- (earned-income credit)
a tax credit given to working parents (single or married) who earn under a particular amount depending on their filing status.
What are the 5 different categories for filing a tax return?
Single - Includes never-married, divorced, legally separated persons who do not have any dependents during tax year.
Married, filing jointly- Includes married individuals ( with or without dependents) who each file a separate tax return on only their own income.
Head of household- includes all single individual who maintain a household for one or more dependents ( & pays half or more of their support)
Qualifying Widow- includes individuals whose Spouse has died within the past two years and the individual is supporting at least one dependent.
What are the 3 basic tax forms?
1040EZ, 1040A, & 1040.
