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20 Cards in this Set
- Front
- Back
What is the act that followed after the 16th admendment, it allows tax collection and surtax directly?
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Revenue Act of 1913
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What kind of tax rate structure is used in the US?
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Progressive
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Used to acheive economical, political, and social goals
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Tax Laws
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Who does federal income tax apply directly to?
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Individual taxpayers, regular corporations, estates, and trusts
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Federal income tax applies indirectly to these groups.
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Flow-through entities which are partnerships and S corporations
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This determines tax liability after computing taxablable income
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Tax rate
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The five filing groups.
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Single, HOH, married joint, married separate, surviving spouse
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Reduces tax liability in chunks.
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Tax credit
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Reduces tax liability in fractional amounts, because it depends on the tax bracket.
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Deduction
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What is gross income?
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All wealth that flows to a taxpayer from whatever source derived.
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Subtracted from gross income to arrive at AGI.
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above the line or for deduction
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Subtracted from AGI to get taxable income.
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below the line or from deduction
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These groups do not compute AGI.
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Corporations, partnerships, estates, and trusts, so ones who do are individuals
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What are ways to reduce AGI?
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Itemized deductions, standard deductions, personal exemptions, and dependency exemptions
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Types of standard deductions.
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Basic and Additional
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This deduction is replaced by the other when the other exceeds its total.
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Itemized
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This deduction is used to avoid keeping detailed records.
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Standard
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A situation where the deduction used needs to be consistent.
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Married filing separate
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These fall under itemized deductions.
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Personal Expenses
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This amount is for dependents who is using basic standard deduction.
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Greater of 800 or earned income plus 250
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