Chapter 3 Personal Finance Test

Revenue Incoming taxes, which are treated as income by the government, are called Revenue.
Progressive Tax A tax that increase in proportion to increase in income is known as a Progressive tax.
Taxable After the standard deduction and exemptions are subtracted from adjusted gross income, you arrive at your taxable income.
Standard Deduction In order to avoid itemizing deductions, a person may elect to take the Standard Deduction, which is a flat amount.
Alemoney Money paid to a former spouse (which is taxable income) for that person’s support is called Alemoney.
Child Support Money paid to a former spouse (which is not taxable income) for the support of dependent children is called Child Support.
Itemized Deductions Expenses that can be subtracted from adjusted gross income to determine your taxable income.
Adjusted Gross Income The amount remaining when adjustments are subtracted from gross income.
Gross Income When all sources of taxable income are added together, the total is called Gross Income.
Exemption An amount that can be subtracted from your income for each person who depends on your income to live is an Exemption.
Regressive Tax A Regressive tax allows a higher-income person to pay a lower percentage of income in taxes than a lower-income person.
Tax Evasion To intentionally fail to pay taxes owed is to commit a serious crime called Tax Evasion.
Voluntary Compliance A tax system that is based on Voluntary Compliance requires all citizens to be responsible for preparing and filing their tax returns on time and paying taxes due.
Proportional Tax A type of tax for which the rate stays the same regardless of income is called Proportional Tax.
Tax Credit A Tax Credit is an amount subtracted directly from tax owed.
IRS (Internal Revenue Service) An administrative agency of the federal government that collects taxes and enforces tax laws.
Audit An examination of tax returns by the IRS.

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