Personal Taxation

Question 0

What 5 states don’t charge tax?

Answer 0

Alaska, Delaware, Montana, New Hampshire & Oregon

Question 1

Where are the 4 main places we pay taxes?

Answer 1

Purchases, property, wealth, & earnings.

Question 2

Excise tax-

Answer 2

federal &/or state tax on specific goods like gas,tires, airfare & cigarettes

Question 3

Estate taxes-

Answer 3

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.

Question 4

Inheritance taxes-

Answer 4

government imposed on property or assets that are passed on after someone has died & bequeathed the assets to another.

Question 5

Income taxes-

Answer 5

Imposed on the amount of money that each person earns during a calendar year.

Question 6

When did the government begin collecting income tax?

Answer 6

In 1913 after the 16th amendment was passed.

Question 7

Progressive tax systems-

Answer 7

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.

Question 8

Regressive tax systems-

Answer 8

Charge everyone the exact same percentage, amount, or proportion in taxes.

Question 9

What is the overall tax structure in the U.S.?

Answer 9

a progressive system. It currently uses tax brackets as a part of its progressive tax system.

Question 10

Internal Revenue Service-

Answer 10

Collects federal income taxes, also interprets tax Laws & clarifying confusing aspects for citizens.

Question 11

What is the Internal Revenue Code?

Answer 11

A collection of tax laws, their interpretations, & federal tax rulings.

Question 12

How to file a tax return-

Answer 12

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

Question 13

Gross income-

Answer 13

All sources of income.

Question 14

What forms if income aren’t included in the calculation of gross income?

Answer 14

Scholarships, disability income, welfare, inheritances, or child support.

Question 15

Adjusted gross income-

Answer 15

Gross income minus specific deductions.

Question 16

Standard deduction-

Answer 16

An amount subtracts from your adjusted gross income based on your filing status.

Question 17

exemptions-

Answer 17

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.

Question 18

Alternative Minimum Tax-

Answer 18

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.

Question 19

Tax credits-

Answer 19

Reduce your taxes by the actual amount

Question 20

Deductions-

Answer 20

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.

Question 21

EIC- (earned-income credit)

Answer 21

a tax credit given to working parents (single or married) who earn under a particular amount depending on their filing status.

Question 22

What are the 5 different categories for filing a tax return?

Answer 22

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.

Question 23

What are the 3 basic tax forms?

Answer 23

1040EZ, 1040A, & 1040.

Question 24

How many different tax forms are there?

Answer 24

400

Question 25

What are the options for tax preparation?

Answer 25

Ourselves by hand, using tax software, or hiring a professional to prepare the forms for us.

Question 26

what are some benefits of hiring a professional tax preparation service?

Answer 26

They are more up to date on tax laws & possible deductions & credits you could qualify for.

Question 27

What two taxes are Due once a year ?

Answer 27

Federal & state taxes

Question 28

What is the most common way of making tax payments?

Answer 28

Withholding.

Question 29

Withholding taxes-

Answer 29

Happen through out the year as an employer takes portion of your pay & sends it to the IRS rather than putting it in your paycheck. The amount withheld depends on your particular deductions and exemptions.

Question 30

Estimated payments-

Answer 30

Often used by individuals who are self employed, have investments, or have other income where employer withholding is not offered. each individual estimates the amount of taxes owed based on anticipated income for the year & then divides the amount owed into atleast 4 different payments, submitting those thoughout the year.

Question 31

When are federal taxes & returns due each year in the U.S.?

Answer 31

April 15th. Failure to file the return or the extension can result in penalties. Failure to pay the taxes owed in full by the deadline can result in late penalties and interest on the unpaid amount until it is paid in full. Attempting tax fraud can result in criminal prosecution.

Question 32

Tax audit-

Answer 32

A detailed examination of a return by the IRS. Requires to provide more info about their income, deductions, etc..

Question 33

What are the different type of audits?

Answer 33

Correspondence audit - simplest one. Requires an individual to respond via mail to clarify items or proved more info.

Office audit- requires an individual to visit an IRS office to Clarify items or provide more info.

field audit- an IRS agent visits the persons home, business, or accountant office. these are more detailed, the visit allows the individual to have access to all of their records.