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Chapter 7 Review

Chapter 7 Review. pp.137-156. Money paid to a former spouse for support of dependent children is called…. Child support. A tax theory that states individuals with high income should pay more taxes than people with low incomes. The ability to pay. Almost all consumption taxes are….

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Chapter 7 Review

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  1. Chapter 7 Review pp.137-156

  2. Money paid to a former spouse for support of dependent children is called… • Child support

  3. A tax theory that states individuals with high income should pay more taxes than people with low incomes. • The ability to pay

  4. Almost all consumption taxes are…. • Regressive

  5. Sales taxes imposed on specific goods and services such as tobacco are… • Excise taxes

  6. Excise taxes are … • Regressive

  7. Federal taxes provide funds for… • Congress • National defense • Highways • Wildlife refuges • Welfare • Foreign aid

  8. Taxes for which the rate stays the same regardless of income are…. • Proportional Taxes

  9. Federal Income tax is an example of … • Progressive tax

  10. How does a revenue bill become a law? • It must pass a vote in both the House and Senate and then be signed by the President.

  11. The government spends_______ according to priorities set by congress. • revenue

  12. What are the main functions of the IRS? • Collect Income taxes • Enforce tax laws

  13. Who has the power to levy taxes? • Congress

  14. Money received from working… • Earned income

  15. What is a tax bracket? • Ranges of income

  16. When the government spends more than it receives in revenue it has a… • Deficit/shortage

  17. Another name for proportional taxes are… • Flat taxes

  18. These types of taxes take a smaller portion of your income as your income grows… • Regressive taxes

  19. The idea that citizens are expected to prepare and file tax returns of their own accord without force is referred to as… • Voluntary Compliance

  20. IRS stands for… • Internal Revenue Service

  21. Who pays taxes? • Businesses • Individuals

  22. Sales tax is an example of this kind of tax… • Regressive

  23. A person who lives with you and for whom you pay more than half of their living expenses…. • dependent

  24. Willful failure to pay taxes is called… • Evasion

  25. Property tax is an example of this kind of tax…. • Proportional/flat

  26. The punishment for not paying taxes is.. • Fine • Imprisonment • both

  27. These types of taxes take a larger portion of your income as your incomes grows. • Progressive taxes

  28. An examination of your tax returns by the IRS is an… • Audit

  29. Which tax form must you fill out if you want to itemize deductions? • 1040A

  30. Our tax system is graduated. What does this mean? • Tax rates increase as taxable income increases

  31. Money paid to a former spouse is called… • alimony

  32. In this type of audit the taxpayer sits down with the auditor to answer questions and produce records. • Office

  33. You are allowed to subtract some types of spending from your gross income to determine your… • Adjusted gross income

  34. In this type of audit the IRS sends a letter, asking the taxpayer to respond to specific questions or produce evidence of deductions or other entries on the tax return. • Correspondence

  35. In this type of audit, the IRS agent visits the taxpayers home or business to examine records. • Field

  36. This is based on your marital status as of the last day of the tax year… • Filing status

  37. Give an example of filing status… • Single • Married filing a joint return • Married filing a separate return • Head of Household • Qualifying widow

  38. Where do W-2’s come from? • Each employer you had for the year

  39. The amount of money you may subtract from your income for each person who depends on your income. • Exemption

  40. If you are filing a joint return you can take an exemption for your….. • spouse

  41. What kind of information is on the W-2? • Salaries • Wages • Tips • Taxes withheld

  42. Most new tax payers use one of two forms, what are they? • 1040EZ • 1040A

  43. An example of earned income is… • Wages • Salary • Tips

  44. An example of unearned income is… • Interest • Dividends • Alimony • Unemployment • Workers compensations • Scholarships • Grants

  45. Give an example of income that is not taxable… • Non-taxable income • Child support • Gifts • Inheritances • Life Insurance benefits • Veterans benefits

  46. All taxable income received… • Gross Income

  47. What is the difference between a tax credit and a tax deduction? • Tax deduction is subtracted from adjusted gross income • Tax credit is subtracted from what you owe

  48. Money you received from a passive activity… • Unearned income

  49. Expenses you can subtract from adjusted gross income to determine your taxable income are… • Itemized deductions

  50. Instead of itemizing your deductions you can take the….. • Standard deduction

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