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38 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Internal Revenue Code
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tax laws passed by Congress
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imposes a higher tax on higher incomes
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progressive tax
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places a disproportionate burden on low income tax payers., ex: FICA gas taxes
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regressive tax
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Internal Revenue Code
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tax laws passed by Congress
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how long does the average american work to pay for his/her taxes per year?
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3.5 months
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imposes a higher tax on higher incomes
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progressive tax
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places a disproportionate burden on low income tax payers., ex: FICA gas taxes
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regressive tax
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government agency responsible for collecting taxes
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IRS
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tax laws passed by Congress
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Internal Revenue Code
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how long does the average american work to pay for his/her taxes per year?
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3.5 months
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largest source of learned income, from employment
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earned income
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increase in value of taxable investments that you sold during the year
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capital gain
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certain expenses subtracted from total income to arrive at _____.
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adjusted gross income (AGI)
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an amount of money you can subtract from taxable income for each qualifying person in the household
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exemption
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the amount of money you can deduct from your income to determine "taxable income"
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deduction
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directly reduces the amount of tax you owe
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tax credit
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examples of tax credit
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education credit, adoption, credit, child care credit
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what amount can you deduct for each exemption you can claim in 2006?
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$3,300
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what is the standard deduction for a person filing with single status?
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$5,150
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what is the standard deduction for a person filing married and jointly?
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$10,300
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what is the standard deduction for a person filing as head of household?
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$7,550
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a dollar amount based on filing status
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standard deduction
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you report and deduct actual expenses in certain categories
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itemized deduction
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what happens to taxes when you sell an asset for a profit?
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they are postponed
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how long are long term gains from assets held for?
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12 months or more
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how are short term gaines taxed?
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marginal tax rate
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up to what amount are gains on the sale of your primary home tax free?
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$500,000 per couple or $250,000 per individual
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shows how much income tax must be paid for particular ranges of income. There are separate schedules for different household types.
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tax rate schedule
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range of taxable income to which a particular marginal tax rate applies
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tax bracket
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None
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what is aimed at minimizing your average tax rate or the proportion of total taxable income paid in taxes?
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tax planning
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what is the formula to determine average tax rate?
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taxes paid/taxable income
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when making decisions you should always consider the ____, which is the reduction in taxes owed as a result of a financial decision
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marginal tax rate
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What does the AMT do?
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calculates your taxes under a different set of rules in which many deductions do not apply, result: you pay a higher rate.
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T or F: Most taxpayers have less withheld than they owe, and therefore do not receive a refund.
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False; most do
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Usually a person who is self-employed owes taxes beyond federal. What is an example of this?
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FICA
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What is the time and date when the tax returns must be postmarked?
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midnight on April 15th of the year following the tax year
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What is an online system used to replace manual steps when filing taxes?
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e-file
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Name the three primary forms.
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1040, 1040EZ, 1040A
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