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39 Cards in this Set
- Front
- Back
Taxes
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The dues paid for membership in our society. The cost of living in this country |
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The largest Tax you will pay
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Federal Income Tax
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The average family pays__________ of its gross income in taxes.
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One-Third
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Progressive Tax Structure
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of taxable income, the higher the rate at which it is taxed. |
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marginal tax rate
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The tax rate that you pray o the next dollar of taxable income. |
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Average Tax rate
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is taxed on averate... Tax Liability / Taxable income |
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Name 5 Filing Status ( based on marital status and family situation on last day of year)
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Single, Married filing Jointly, Married filing seperately, Head of household ,Qualifying widow |
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FICA
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survivors disability, and hospital insurance tax levied o both employer and employee. |
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Take-Home Pay
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The amount youre left with after subtracting the amount whitheld from your gross earnings. |
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The amount of Federal witholding taxes deducted from your gross earnings depends on: |
1) The leve of your earnings and the number of witholding allowances you have claimed on your W-4. |
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Socially security tax is paid by_____
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It's paid equally by the employee and employer. |
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Single Taxpayers:
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Unmarried or legally seperated from their spoused by either seperationg or final divorce |
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Married Filing Jointly
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and allowable deductions and file one tax return |
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Married filing Seperately
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reporting only his or her income, deductions, and exemptions |
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Head of Household
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of keeping up a home for himself and an eligible dependent child. |
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Widow
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A peron whose spoud died within two years of the tax year, and who supports a dependent child |
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Taxable Income
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1) adjustments, 2) the larger of itemized or standard deductions, and 3) Exemptions from gross income. |
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Explain the process of finding taxable income
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1. Gross Income, 2. Adjusted Gross Income, 3. Taxable income, Total Tax Liabilty owed.
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Examples of Tax-Exempt income
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interest payments, certain types of employee finge benefits, compesenation from accident, health and life insurance policies, scholarships, gifts, inheritances |
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What are the three types of Income
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Passive Income |
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Active Income:
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Income earned on the job, such as wages, salaries, bonuses, most other forms of noninvestment income. |
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Portfolio Income:
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Earnings (intereste, dividends, and capital gains) generated from most types of investment holdings --savings accounts, stocks, bonds, mutual funds |
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Passive Income
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A special category that includes income derived from real estate, limited patnerships and other forms of tax sheleters.
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Capital Gains and what income category do they fall under? |
Portfolio income |
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What is the rule about writing off capital losses?
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Taxpayers can write- off capital losses dollar for dollar against capital gains, and an additonal 3,000 past that.
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Explain the special treatment of home sellers when it comes to capital gains.
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Can exclude a certain amount of capital gain from the selling of their house from their taxable income.
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Definition: Adjustments to (gross) income:
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Allowable deductions from gross income, including certain employee, personal retirement, insurance, and support expenses. Used to calculdate limits for certain itemized deductions. |
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Name five examples of ajustments to gross income
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Educator expenses, higher tuition costs, IRA contributions, alimony paid, moving expeneses |
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Def: Itemized Deductions:
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from AGI when determining taxable income. |
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Name some of the most common itemized deductions
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1) Mediacal and dental expenses, 2) Sate local and foreign income and property 3) Casualty and theft losses, Charitable contributions, job and other expenses |
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Standardized Deduction VS. Itemized Deductions |
Standard: A "blanket" deduction base don filing stauts, age, and vision. Itemized is personal |
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Def: Exemptions
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Deductions from AGI based on the number of persons supported by the taxpayers income are called exemptions. |
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Def: Tax Credits Deductions from a taxpayer's liability that directly reduce his or her taxes due rather than taxable income. |
Deductions from a taxpayer's liability that directly reduce his or her taxes due rather than taxable income. Reduces Taxes due Dollar for Dollar |
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Give some examples of Tax Credits
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child tax credit, |
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Def:Estimated Taxes , which form is used, who pays them
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to withholding that are paid in four installments. Form 1040-ES, Lawyesr, business ownwers, investors |
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Tax Audit:
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An examination by the IRS to validate the accuracy of a given tax return |
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Def: Income Shifting
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in lower tax brackets. |
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Def: Tax Deffered, give an example
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Income that is not subject to taxes immediately but that will be subject to taxes later, IRA or municipal bonds |