Individual Income Tax Ch 3 Terms

Front 1

The abandoned spouse provision enables a married taxpayer with a dependent child whose spouse did not live in the taxpayer’s home during the last six months of the tax year to file as a head of household rather than as married filing separately.

Back 1

Abandoned spouse

Front 2

A tax credit based solely on the number of qualifying children under age ____. The maximum credit available is _____ per child through _____. A qualifying child must be claimed as a dependent on a parent’s tax return in order to qualify for the credit. Taxpayers who qualify for the child tax credit may also qualify for a supplemental credit.

Back 2

17;$1000;2010; child tax credit

Front 3

A special type of capital asset, the gain from which is taxed at a maximum rate of ____ percent if the holding period is more than one year. Examples include art, rugs, antiques, gems, metals, stamps, some coins and bullion, and alcoholic beverages held for investment.

Back 3

28;Collectibles

Front 4

The electronic filing of a tax return. The filing is either direct or indirect. As to direct, the taxpayer goes online using a computer and tax return preparation software. Indirect filing occurs when a taxpayer utilizes an authorized IRS e-file provider. The provider often is the tax return preparer.

Back 4

e-file

Front 5

An unmarried individual who maintains a household for another and satisfies certain conditions set forth in §2(b). Such status enables the taxpayer to use a set of income tax rates [see §1(b)] that are lower than those applicable to other unmarried individuals [§1(c)] but higher than those applicable to surviving spouses and married persons filing a joint return [§1(a)]. See also tax rate schedules.

Back 5

Head of household

Front 6

Certain personal expenditures allowed by the Code as deductions from adjusted gross income

Back 6

Itemized deductions

Front 7

Examples of Itemized deductions include

Back 7

certain medical expenses, interest on home mortgages, state income taxes, and charitable contributions

Front 8

Itemized deductions are reported on Schedule ? of Form 1040

Back 8

A

Front 9

a taxpayer whose adjusted gross income exceeds $? ($? for married filing separately) must reduce the itemized deductions by ? percent of the excess of adjusted gross income over $?

Back 9

100,000;50,000;3;100,000

Front 10

?, ?, ?, and ? deductions are not subject to the 3 percent reduction on itemized deductions for persons whos AGI exceeds $100,000

Back 10

Medical, casualty and theft, and investment interest deductions

Front 11

To reduce the tax savings that result from shifting income from parents to children, the net unearned income of a child under age ? is taxed at the marginal tax rate of the parent(s). For the provision to apply, the child must have __ and unearned income of more than $___for the tax year. §1(g). See also unearned income.

Back 11

14,at least one living parent,1,700

Front 12

The additional tax liability that results for a married couple compared with what their tax liability would be if they were not married and filed separate returns.

Back 12

Marriage penalty

Front 13

Where no one person provides more than 50 percent of the support, a multiple support agreement enables a tax payer to still qualify for the dependency exemption. Any person who contributed more than 10 percent of the support is entitled to claim the exemption if each person in the group who contributed more than 10 percent files a written consent

Back 13

Multiple support agreement

Front 14

An individual who, as to the tax payer, satisfies the relationship, abode, and age tests. To be claimed as a dependent, such an individual must also meet the citizenship and joint return tests and not be self-supporting.

Back 14

Qualifying child

Front 15

Also referred to as investment income, it includes such income as interest, dividends, capital gains, rents, royalties, and pension and annuity income.

Back 15

Unearned income