3.1-3.2 Quiz

tax

payment imposed on a taxpayer by a governmental unit

revenue

incoming funds to the government collected from individuals and businesses in the form of taxes

progressive tax

tax that takes a larger share of one's income as the amount of income grows (federal)

regressive tax

tax that takes a smaller share of one's income as the amount of income grows (sales tax)

proportional/flat tax

tax for which the rate stays the same regardless of one's income (property tax)

tax bracket

an income range that a tax rate is applied to

voluntary compliance

system in which all citizens prepare and file tax returns on their own

audit

examination of income tax returns by the IRS

filing status

tax-filing group based on your marital status as of the last day of the tax year

exemption

amount you may subtract from your income for each person who depends on your income to live

gross income

all of the taxable income you receive during the year

adjusted gross income

gross income less adjustments

itemized deductions

expenses you can subtract from adjusted gross income to determine your taxable income

tax liability

amount of total tax you owe on a year's income

taxable income

income on which you will pay tax

tax credit

reduction of taxes owed

exempt status

available only to those who know they will not earn enough in one year to owe income tax

estimated tax

amount of tax you estimate you will owe on income received without withholdings

standard deduction

A stated amount that you may subtract from adjusted gross income instead of itemizing your deductions

alimony

payments made regularly to an ex-spouse after divorce