test unit 8

Question 1

beneficiary

Answer 1

person who is named to receive a portion of someone’s estate

Question 2

estate

Answer 2

all the property and assets owned by an individual and/or group

Question 3

estate tax

Answer 3

federal tax collected on the total value of a person’s property and assets at the time of his or her death

Question 4

excise taxes

Answer 4

state or federal tax placed on non-essential, luxury consumer goods

Question 5

gift tax

Answer 5

a tax imposed on transfers of property (money or other assets) during a person’s life

gifts up to 15k per person per year are not subject to the tax

Question 6

income tax

Answer 6

tax on wages, salaries, and self-employed earnings

Question 7

inheritance tax

Answer 7

a tax, collected in some states, on property left by a deceased person

Question 8

internal revenue service (irs)

Answer 8

government agency that collects taxes for the U.S. government

Question 9

intestate

Answer 9

status of not having a will

Question 10

payroll taxes

Answer 10

taxes deducted from the wage earner’s gross pay by the employer

Question 11

probate

Answer 11

legal procedure of proving that a will is valid or invalid

Question 12

progressive tax

Answer 12

the tax rate rises as the amount of taxable income rises

ex: income tax

Question 13

property tax

Answer 13

taxes paid by people who own items such as homes, land, and vehicles to the city and/or country where the property is located

Question 14

proportional tax

Answer 14

levies the same percentage of tax at all income levels

a “flat” tax

ex: property tax

Question 15

regressive tax

Answer 15

imposes a higher percentage of tax on people with lower incomes

ex: sales tax

Question 16

sales taxes

Answer 16

state and local taxes imposed on retail goods & services (products) and are based on a set percentage of retail cost

Question 17

tax credit

Answer 17

amount of money that can be subtracted directly from taxes owed

Question 18

tax deduction

Answer 18

expense subtracted from your adjusted gross income to figure taxable income

Question 19

taxes

Answer 19

required payments of money to governments used to provide public goods and services

Question 20

will

Answer 20

legal declaration (or statement) of a person’s wishes regarding disposal of his or her estate after death

Question 21

people who are entitled to receive property from the will are called…

Answer 21

heirs

Question 22

if someone dies without a will, who will guide the process?

Answer 22

a judge

Question 23

who do you appoint in your will if you have minor children?

Answer 23

a guardian, this person is legally responsible for the care of your children in the event of your death

Question 24

estate planning can help increase the amount of taxes due on any asset

Answer 24

false

Question 25

you can give presents to benefit your heirs while you are alive to reduce the taxable amount of your estate

Answer 25

true

Question 26

an estate tax is a type of excise tax that is levied on the value of an asset an heir receives from the estate of the deceased

Answer 26

true

Question 27

the marital deduction means an asset is not taxed when you leave the asset to your spouse in your will

Answer 27

true

Question 28

inheritance tax does not need to be paid on bequests received by a beneficiary named in a will

Answer 28

true

Question 29

in estate planning, when someone gives a gift of any value to someone else, he or she must pay a gift tax

Answer 29

false

Question 30

if you make a charitable donation to nonprofit organizations in your will, your heirs will pay taxes on the value of the donations

Answer 30

false

Question 31

there are no types of taxes that can have an impact on your estate after your death

Answer 31

false

Question 32

another name for will is an advanced medical directive

Answer 32

false asf...

Question 33

bankruptcy

Answer 33

legal process in which some or all of the assets of a debtor are distributed among creditors because the debtor is unable to pay his or her debts

Question 34

borrower

Answer 34

a person or organization that is receiving money

Question 35

certificate of deposit (cd)

Answer 35

a savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return

Question 36

closed-end credit

Answer 36

credit as a one-time loan that is paid back over a specified period of time in payments of equal amounts

Question 37

collateral

Answer 37

a form of security that helps guarantee that the creditor will be repaid

Question 38

commercial banks

Answer 38

a for-profit institution that offers a full range of financial services, including, checking, savings, and lending

Question 39

credit

Answer 39

an arrangement to receive cash, goods, or services now and pay for them in the future

Question 40

credit bureau

Answer 40

an agency that collections information on how promptly people and businesses pay their bills ex: experian, trans union, equifax

Question 41

credit limit

Answer 41

the maximum amount of a credit card company will allow someone to borrow on a single card

Question 42

credit union

Answer 42

a nonprofit financial institution that is owned by its member and organized for their benefit

Question 43

debit card

Answer 43

a cash card that allows one to withdraw money or pay for purchases with a checking or savings account

Question 44

interest rate

Answer 44

the price that is paid for the use of another's money

Question 45

money market accounts

Answer 45

a savings account that requires a minimum balance and earns interest that varies from month to month

Question 46

principal

Answer 46

the amount of money borrowed or the amount still owned on a loan, separate from interest

Question 47

savings account

Answer 47

a bank account that earns interest

Question 48

all wages, salaries, and tips

Answer 48

money earned at jobs from january 1st through december 31st of the previous calendar year

Question 49

interest income

Answer 49

earned from bank accounts and bonds as stated on form 1099-int

Question 50

dividend income

Answer 50

money earned from stocks as stated on form 1099-div

Question 51

unemployment compensation

Answer 51

income earned through unemployment insurance after losing a job, 1099-g

Question 52

social security benefits

Answer 52

payments made to dependents, stated on ssa-1099

Question 53

alimony

Answer 53

money paid to former spouse after a divorce

Question 54

w-2 form

Answer 54

summarizes annual wages, amount of taxes withheld, 401k and 403b payments

Question 55

what happens if you are a tax evader?

Answer 55

government advises them about money owed including interest when caught, may face jail time, can seize their assets and auction them for money if they do not have the money owed

Question 56

how does the government know who has not paid the correct amount?

Answer 56

irs checks returns for accuracy, protects tax revenue, and performs tax audits

Question 57

tax audit

Answer 57

a detailed examination of a person's tax return by the irs

Question 58

fairness of taxes

Answer 58

is judged by the benefits received and the ability to pay

Question 59

benefit principle of taxation

Answer 59

those who receive (benefit) from the government service should pay more taxes to support the service ex: public college tuition

Question 60

ability to pay principle of taxation

Answer 60

those who earn higher incomes should pay more taxes ex : taxes on luxury goods

Question 61

executor

Answer 61

a person who is willing to distribute your estate

Question 62

guardian

Answer 62

a person who accepts responsibility of caring for minor children

Question 63

living will

Answer 63

a written statement detailing a person's desires regarding their medical treatment in circumstances in which they are no longer able to express informed consent

Question 64

power of attorney

Answer 64

a document used to appoint someone to make decisions on your behalf

Question 65

trust

Answer 65

an arrangement in which a designated person manages assets for the benefit of someone else

Question 66

what would parents leave in their will?

Answer 66

important assets like heirlooms, vehicles, even bank accounts

Question 67

a gas tax paid by all drivers is fair according to the criterion of ability to pay

Answer 67

true

Question 68

because property taxes usually support schools, people with no children do not have to pay them

Answer 68

false

Question 69

our federal income tax is based on the ability to pay principle

Answer 69

true

Question 70

in the United States, people with low incomes are allowed no benefits

Answer 70

false

Question 71

all people benefit equally from government services

Answer 71

false