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Chapter 7 Review

Chapter 7 Review. Personal Finance. 1. _____________ taxes are taxes that take a larger share of income as the amount of income grows. Progressive. 2. ___________ taxes are taxes that take a smaller share of income as the amount of income grows. Regressive. 3. What does IRS stand for?

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Chapter 7 Review

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  1. Chapter 7 Review Personal Finance

  2. 1 • _____________ taxes are taxes that take a larger share of income as the amount of income grows. • Progressive

  3. 2 • ___________ taxes are taxes that take a smaller share of income as the amount of income grows. • Regressive

  4. 3 • What does IRS stand for? • Internal Revenue Service

  5. 4 • Child support is _________ for the person paying it. • Not deductible

  6. 5 • List an example of a progressive tax. • Federal income tax

  7. 6 • Alimony is _________ for the person receiving it. • Taxable

  8. 7 • _________ is the largest source of government revenue. • Income tax

  9. 8 • Some types of spending may be subtracted from gross income. The amount after these deductions is your _________________. • adjusted gross income

  10. 9 • The income on which you will pay tax. • Taxable income

  11. 10 • _________ are taxes imposed on specific goods and services. • Excise taxes

  12. 11 • The Constitution provides that “all bills for raising revenue shall originate in the ________________ .” • House of Representatives

  13. 12 • Interest income is reported on a ______. Your bank mails you this form if you have taxable interest from a savings account. • 1099

  14. 13 • Child support is _______ for the person receiving it. • Not taxable

  15. 14 • An agency of the Department of Treasury headquartered in Washington, D.C. • IRS

  16. 15 • An example of an excise tax. • Cigarettes or gasoline

  17. 16 • A __________ is a person who lives with you and who receives more than half his or her living expenses from you. • Dependent

  18. 17 • Alimony is ________ for the person receiving it. • Taxable

  19. 18 • All taxable income you receive, including wages, tips, salaries, interest, dividends, unemployment compensation, alimony, workers’ compensation benefits, and so forth. • Gross income

  20. 19 • The U.S. income tax system is based on ___________, which means that all citizens are expected to prepare (or have prepared) and file income tax returns. • voluntary compliance

  21. 20 • Failure to pay taxes is called ________. • Tax evasion

  22. 21 • Form _____ lists all income you receive through employment. • W-2

  23. 22 • An examination of a tax return by the IRS. • Audit

  24. 23 • ____________ are taxes for which the rate stays the same regardless of the amount on which the tax is imposed. • Proportional taxes (flat taxes)

  25. 24 • You must file a tax return by _______ of the year after you earned income. • April 15th

  26. 25 • Where the taxpayer sits down with the auditor to answer questions and produce records. • Office audit

  27. 26 • The IRS asks the taxpayer to respond to specific questions or produce evidence of deductions or other entries on the tax return. • Correspondence audit

  28. 27 • Explain why the federal income tax is considered a progressive tax. • The tax rate increases as income increases. (tax brackets)

  29. 28 • Last year Jill worked at Menards, McDonald’s, and babysat 5 times for her aunt. How many W-2 forms will she receive? • 2

  30. 29 • What is the lowest tax bracket? • 10%

  31. 30 • Who must file a tax return? • Anybody who worked & had money deducted.

  32. 31 • Money collected by the government through taxes. • Revenue

  33. 32 • List an example of a flat tax. • Property tax

  34. 33 • An IRS agent or local representative visits the taxpayer to verify information or ask specific questions. • Field audit

  35. 34 • Another name for a proportional tax. • Flat tax

  36. 35 • An amount you may subtract from your income for each person who depends on your income to live. • Exemption

  37. 36 • Taxes that take a larger share of income as the amount of income grows. • Progressive taxes

  38. 37 • Taxes for which the rate stays the same regardless of the amount on which the tax is imposed. • Proportional or flat taxes

  39. 38 • An examination of a tax return by the IRS. • Audit

  40. 39 • Income on which you will pay tax. • Taxable income

  41. 40 • Expenses the law allows taxpayers to subtract from their adjusted gross income to determine their taxable income. • Deductions

  42. 41 • Taxes that take a smaller share of income as the amount of income grows. • Regressive taxes

  43. 42 • Money paid to support a former spouse. • Alimony

  44. 43 • Money paid to a former spouse to support dependent children. • Child support

  45. 44 • All the taxable income received during the year, including wages, tips, salaries, interest, dividends, alimony, and unemployment compensation. • Gross income

  46. 45 • Stated amount taxpayers may subtract from adjusted gross income instead of itemizing their deductions. • Standard deduction

  47. 46 • Income ranges to which different tax rates apply. • Tax brackets

  48. 47 • Willful failure to pay taxes. • Tax evasion

  49. 48 • The process of listing allowable deductions on a tax return. • Itemize

  50. 49 • The amount taxpayers may subtract from their income for each person who depends on their income to live. • Exemption

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