Fundamentals of Taxation

Business

Quiz 1 :

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Quiz 1 :

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

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Jose and Maria Suarez are married and live at 9876 Main Street, Denver, CO. Jose's SSN is 412-34-5670 and Maria's SSN is 412-34-5671. For the first five months of the year, Jose was employed by Mountain Mortgage Company. The Form W-2 from Mountain Mortgage contained information in the following boxes: img Jose was laid off from his job at Mountain Mortgage and was unemployed for three months. He received $1,000 of unemployment insurance payments. The Form 1099-G Jose received from the State of Colorado contained $1,000 of unemployment compensation in box 1 and $75 of federal income tax withholding in box 4. The last four months of the year, Jose was employed by First Mountain Bank in Denver. The Form W-2 Jose received from the bank contained information in the following boxes: img Maria was employed the entire year by Blue Sky Properties in Denver. The Form W-2 Maria received from Blue Sky contained information in the following boxes: img The Suarezes also received two Form 1099-INTs showing interest they received on two savings accounts. One Form 1099-INT from the First National Bank of Northeastern Denver showed interest income of $59.36 interest income of in box 1. The other Form 1099-INT from Second National Bank of Northwestern Denver showed interest income of $82.45 in box 1. Prepare a Form 1040EZ for Mr. and Mrs Suarez.
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(Introduction) For tax year 2007, what proportions of individual income tax returns were filed on a Form 1040EZ, Form 1040A and Form 1040? What proportion were electronically filed?
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Income tax:
Income tax is the part of the income that the earner pays in return to the government of the country. It is a compulsory obligation of every earner. It is calculated by the income tax department of the country as per pre-determined slabs.
Income tax return:
It is a form in which information about the income and tax on income assess. It is filed with a taxing authority in which information about your tax refund or tax liability reported. A person is liable to file this tax return whose gross income is more than a statutory amount. There are three standard individual tax returns Form in the US (Form 1040, Form 1040A, and Form 1040EZ).
Prepare the schedule showing the proportion of tax filled in 2007 as follows:
img Spreadsheet of the above calculation:
img

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What is the most common way taxpayers pay their income tax liability during the year?
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Tax: The usual sign of tax individuals believe is that a tax forced by the government to satisfy its essential commitments on the use front.
Income tax : An income tax is an assessment that authorities force on pay created by organizations and people inside their region. By law, citizens must record an income tax return form every year to decide their expense commitments.
The full-size majority of taxpayers spend their yearly dues liability through earnings tax withholdings decreased their paychecks by their agency and forwarded to the authorities on the account of the taxpayer.

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What federal tax forms do taxpayers normally receive to inform them of the amount of wages and interest they earned during the year?
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Name the three types of tax rate structures and give an example of each.
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What is the amount of the permitted deduction for single and married taxpayers who use Form 1040EZ?
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Explain why unemployment compensation is taxable.
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What type of tax is a sales tax? Explain your answer.
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A tax rate that decreases as the tax base increases is an example of what kind of tax rate structure? a. Progressive. B) Proportional. C) Regressive. D) Recessive.
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What is the definition of interest ?
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What is meant by compensation for services ? Give some examples.
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(Introduction) Give a brief history of the income tax in the United States.
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What type of tax rate structure is the U.S. federal income tax? Explain your answer.
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A change to a 17% flat tax could cause a considerable increase in many taxpayers' taxes and a considerable decrease in the case of others. Explain this statement in light of the statistics in Table 1-3.
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Jin Xiang is single and lives at 2468 North Lake Road in Lakeland, MN. Her SSN is 412-34-5670. She worked the entire year for Lakeland Automotive. The Form W-2 from Lakeland contained information in the following boxes: img On the weekends, Jin worked at Parts-Galore, a local auto parts store. The Form W-2 from Parts-Galore contained information in the following boxes: img Jin also received a Form 1099-INT from Minnesota Savings and Loan. The amount of interest income in box 1 of the Form 1099-INT was $51.92. Prepare a Form 1040EZ for Jin.
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Brenda Peterson is single and lives at 567 East Street, Beantown, MA. Her SSN is 415-34-5670. She worked the entire year for Applebee Consulting in Beantown. Her Form W-2 contained information in the following boxes: Wages (Box 1) = $61,292.05 Federal W/H (Box 2) = $ 9,851.12 Social Security Wages (Box 3) = $61,292.05 Social Security W/H (Box 4) = $ 3,800.10 Medicare Wages (Box 5) = $61,292.05 Medicare W/H (Box 6) = $ 888.73 She also received two Form 1099-INTs. One was from First National Bank of Beantown and showed interest income of $537.39 in box 1. The other Form 1099-INT was from Baystate Savings and Loan and showed interest income of $281.70 in box 1. Prepare a Form 1040EZ for Brenda.
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What is a progressive tax ? Why do you think the government believes it is a more equitable tax than, say, regressive tax or proportional tax?
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What is the definition of tax base, and how does it affect the amount of tax levied?
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Define and compare these terms: average tax rate and marginal tax rate.
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Explain what is meant by regressive tax. Why is the social security tax considered a regressive tax?
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