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- 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