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26 Cards in this Set

  • Front
  • Back

Progressive Tax

A tax system in which tax rates increase as income increases

Personal Exemptions

A IRS-allowed reduction in your income tax for yourself, your spouse and any dependents that is subtracted before you compute your taxes

Total Income

Another name for gross income

Capital Assets

Assets you own, including such items as stocks, bonds, or real estate

Bracket Creep 2

Bubba was given a cost of living raise and merit raise at work. His federal income was paid at 25% instead of 15%. Bubba has experienced

Personal or Dependency Exemptions

Claiming yourself, your spouse and/or grandparents that you support

Passive Income

Comes from activities in which the taxpayer does NOT actively participate


Deductions from your paycheck are for which mandatory federal insurance programs such as Medicare and Medicaid


Expenditure that are subtracted in an effort to calculate lowest possible taxable

Deductions 2

Expenditure that are subtracted in an effort to calculate lowest possible taxable income

Capitol Loss

Felix sold his stock in GSK corporation for a price less than he paid for

Form 1040x

If you made a mistake, an amended tax return may be filled out on this form

Excise Taxes

Imposed on items such as alcohol and cigarettes, sometimes called sin taxes, and are often aimed at reducing consumption of these items


Income on which the payments of taxes is postponed until some further date

Active Income

Income that comes from wages or a business

Tax Filers

Individuals whose income meets federal guidelines must file a federal income tax return

Tax Credit

Offsets your tax liability in a direct dollar for dollar manner and may actually increase your tax refund beyond the amount paid during the tax year

IRS Collection Mechanisms

Paycheck with holding, quarterly estimated payments and payments submitted with tax returns

Capital Gain Math

Purchase price per share x share price = basis

Sale price less basis = gain

IRS Tax Audit

Reasons include random selection, past audits or suspicious items on a return

Child Tax Return

Reduces the federal income tax you owe by up to $1,000 for each qualifying child under 17

Earned Income Credit

Serves as a negative income tax and is available to low income tax payers

April 15th

The deadline to file your income tax return although an automatic extension may be filed

Bracket Creep

The movement into a higher tax bracket as a result of inflation increasing wages

Marginal Tax Rate

The percentage of the last dollar you earn that goes toward your taxes

W-4 Adjustment

Used to claim deductions and put an end to with holding