Unit 4

Question 1

Tax that requires higher-income taxpayers to pay proportionately more in taxes, through either higher tax rates or other rules

Answer 1

Progressive Tax

Question 2

Tax that places a disproportionate financial burden on lower-income taxpayer

Answer 2

Regressive tax

Question 3

Tax levied bu the U.S. Government on earned income to fund Social Security and Medicare

Answer 3

FICA Payroll Tax

Question 4

The amount of income on which taxes must be paid

Answer 4

Taxable income

Question 5

Tax rate imposed on the taxpayers next dollar of income

Answer 5

Marginal Tax Rate

Question 6

Range of taxable income to which a particular mtr applies

Answer 6

Tax bracket

Question 7

Total percentage of total taxable income you pay in taxes

Answer 7

Average tax rate

Question 8

Change in taxes owed as a result of a financial decision

Answer 8

Marginal tax effect

Question 9

Identifies household type

Answer 9

Marginal tax effect

Question 10

Unmarried or legally separated

Answer 10

Single

Question 11

Married couple filing a single tax return

Answer 11

Married filing jointly

Question 12

Each spouse files their own tax return

Answer 12

Married filing seperately

Question 13

Single person who lives with and pays more than half of the support of a child or relative

Answer 13

Head of household

Question 14

Person whose spouse died within two years of tax year and who lives with and lays more than half of the support for a dependent child

Answer 14

Qualifying wifi with dependent child

Question 15

Earned income and unearned income minus certain allowed adjustments to income

Answer 15

Adjusted Gross Income

Question 16

Wages, salaries, tips, bonuses, commission, and self-employment income

Answer 16

Earned income

Question 17

Interest, dividends, capital gains, rents, royalties, and net business income.

Answer 17

Unearned income

Question 18

Dollar amount based on filing status that is subtracted from Adjusted Gross Income in calculating taxable income

Answer 18

Standard deduction

Question 19

An alternative to the standard deduction in which the taxpayer reports and deducts actual expenses in certain allowed categories to arrive at taxable income

Answer 19

Itemized deduction

Question 20

Income from all sources

Answer 20

Gross income

Question 21

Illegal method of deliberately failing to pay taxes legally owed

Answer 21

Tax evasion

Question 22

Legal. The arrangement of one’s financial affairs to minimize tax liability.

Answer 22

Tax avoidance

Question 23

Reimbursement account for qualified medical and child-care expenses

Answer 23

Flexible spending account

Question 24

An investment account where you pay tax when you withdraw the money

Answer 24

Traditional IRA

Question 25

An Individual retirement account in which you pay taxes now and the funds are tax free when you withdraw them.

Answer 25

Roth IRA