Taxes 1
Seeking legal ways to reduce,eliminate, or defer income tax
What is Tax planning
Step 1- Compensation from all sources
What is total income
Social security and medical taxes withheld
What is FICA
Income not subject to federal taxation
What is exclusions
Tax-deductible expenses that may be used to directly reduce income and ones tax liability
What is itemized deduction
Government imposed charges levied on citizens and their property
What is Taxes
Step 2- All income in the form of money, goods, services, and/or property
What is gross income
This tax rate can can be nearly 40%when state income and social security taxes are included
What is effective marginal tax rate
A sum of money paid regularly by a company. When received from a financial institution they are actually interest.
What are dividends
A base amount of income that all taxpayers who do not itemize deductions may subtract from their Adjusted Gross Income
What is standard deduction
A tax that progressively increases as a taxpayer's taxable income increases
What is Progressive Tax
Step 3-Gross income less any exclusions and adjustments
What is AGI (Adjusted gross income)
Refers to the average amount of one's total gross income that is paid in taxes
What is average tax rate
Money on which and employee has already paid taxes
What is after-tax dollars
What is tax refund
A tax that stays the same for all income with the result that lower income households pay proportionately more in taxes
What is Regressive tax
Step 5- preliminary dollar amount of federal taxes owed to the Government
What is preliminary tax liability
investments on which applicable taxes are paid at a future date instead of the period in which they are incurred.
What is tax-deferred
A rise in the value of a capital asset that gives it a higher worth than the purchase price
What is a capital gain
A form you fill out when filing income taxes
What is 1040
Adjusting for price increases, taxpayers are protected from being forced today more taxes as they earn higher incomes purely because of inflation
What is CPI(Chained consumer priced index)
step 6-Final dollar amount of federal income taxes one owes the government
What is final tax liability
This is what FICA stands for
What is Federal Insurance Contributions Act
A profit on a sale of an Asset that has been held for more than a year
What is a long-term gain or loss
Deliberately and willfully hiding income from the IRS; it is illegal
What is tax evasion