FUNDAMENTALS OF INCOME TAXATION EXAM PACK|GUARANTEED SUCCESS

Chapter 1: The Individual Income Tax Return a Individual A single human being as distinct from a group, class, or family. Form 1040 Form 1040 is the standard Internal Revenue Service (IRS) form that individual taxpayers use to file their annual income tax returns. The form contains ...

Taxes Everyday expense of life that allow your local, state, and federal governments to provide important services What are some things taxes pay the bills for? Medicare, Medicaid, the military, the national debt, police and fire protection, public schools, road maintenance, parks, librarie...

Tax liability The total amount of taxes owed Estate tax A federal tax collected on the property left by a person to his or her heir (s) in a will Income tax return A form, such as 1040 or 1040EZ , on which tax payer reports how much money he or she recieved from working and other so...

Form 1040 U.S. Individual Income Tax Return For federal income tax purposes, a sole proprietor must prepare a personal income tax Form 1040 U.S. Individual Income Tax Return and report the income or loss from the sole proprietorship on his or her personal income tax form. Corportation a com...

Which of the following statements regarding the taxation of compensatory and punitive damages is CORRECT? I. Compensatory damages are generally subject to income tax. II. Punitive damages are generally received income tax-free. B) Neither I nor II Both statements are false. Susan's paren...

Which of the following is NOT a requirement that must be satisfied in order for a legally married taxpayer to qualify as an abandoned spouse and use the head-of-household filing status? 1. The taxpayer must file a separate tax return from the spouse. 2. The taxpayer must furnish over one-half of...

Filing Status Such as single, married filing jointly, Married filing separately, Head of Household, Qualifying widower. This is basically the starting point for doing your taxes is determining this step. Gross income IRS form 1040 this is all income from whatever source derived unless...

tax liability Total amount of tax a person owes. estate tax Is tax collected on the value of a person's property at the time of his or her death. inheritance tax A tax collected on the property left to you by a person in his or her will. income tax Tax paid to the state, fe...

Standard Deduction AGI is reduced by greater of Standard Deduction or Itemized Deduction Based on filing status and calendar year of filing Taxpayer 65 and older can take an additional deduction, another deduction available to those who are blind Itemized Deductions AGI is reduced by ...

Individual A single human being as distinct from a group, class, or family. Form 1040 The standard IRS form that individual taxpayers use to file their annual income tax returns. Corporation A company or group of people authorized to act as a single entity and recognized as such in ...

Basic Formula for Individual Income Tax Income from Whatever source derived MINUS: Exclusions EQUALS: Gross Income MINUS: deductions for adjusted gross income (above-the-line) EQUALS: Adjusted Gross Income (AGI) MINUS: deductions from adjusted gross income (below-the-line) MINUS: greater of i...

Taxable income from a business reported on Schedule C-EZ (short form); Schedule C (long form); or Schedule F (specialized for farmers and ranchers) "Trade or Business" for tax purposes is any activity engaged in for profit. Three common test for deductibles The Ordinary & Necessar...

Basic Federal Income tax Formula INCOME - GROSS INCOME - AVERAGE GROSS INCOME - TAXABLE INCOME * - TAX LIABILITY 1040 forms 1040EZ - no adjustments, under 100k, salary from wages and tips 1040A- IRA and student loan interest only adjustments, only certian creits claimed, deducti...

Which of the following is not a requirement that must be satisfied in order for a legally married taxpayer to use the head of household filing status? a.) The taxpayer must furnish more than half the cost of maintaining the household, b.) The taxpayer must file a separate tax return from the spous...