Introduction to Personal Finance: Chapter 4 - Personal Taxation

These flashcards cover key concepts related to personal taxation as outlined in Chapter 4 of 'Introduction to Personal Finance'.

Taxes are financial obligations imposed on individuals and businesses by __.

government entities.

The purpose of taxes includes building infrastructure, providing social welfare, and paying for __.

national defense.

In any given year, nearly all working adults will pay federal income taxes, state income taxes, payroll taxes, sales taxes, and __.

property taxes.

Gross pay is the total amount earned before __ and other deductions.

taxes

Withholdings are taken out of an employee's pay by the employer and are either mandated by __ or elected by employees.

law

The Federal Insurance Contributions Act (FICA) tax is used exclusively to pay for __ and Medicare.

Social Security.

A property tax is assessed based on the __ of property you own.

value

The federal income tax returns report the taxpayer's information and are filed with the __.

IRS.

The formula for calculating taxable income is Gross income minus deductions for adjusted gross income equals __.

adjusted gross income.

The marginal tax rate is the rate of change in tax resulting from a change in income or __.

deduction.

A tax credit is a __ reduction in an assessed tax liability.

dollar-for-dollar

The Earned Income Credit is a refundable credit designed to reward work and boost the earnings of __ workers.

low-income

Federal surplus occurs when annual federal tax revenue exceeds annual federal __.

expenditures.

Realized income occurs each time you convert one asset into a __ for a gain.

different one

Self-employment tax is paid if your income is greater than $ but less than $167,700.

400

Common federal income tax credits can be categorized into refundable and __ tax credits.

nonrefundable.

To qualify for the Retirement Savings Contribution Credit, your income must be below a certain amount and you must contribute to an __.

IRA or Roth IRA.

It is recommended that individuals keep track of __ to help lower tax liability or increase refunds at tax time.

certain records.