Poop

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Abiltiy to pay

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a criterion of tax fairness that people with different amounts of income should pay different amounts of taxes. Wealth may include assets and property such as houses, cars, stocks, bonds, saving accounts, or valuables. Income includes wages, rents, interest, profits, or other payments.

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Adjusted Gross Income

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Total income reduced by certain adjustments such as IRA deduction and the deduction for alimony paid.

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Benefits Received

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A criterion of tax fairness that people should pay taxes in rough proportion to the benifits they receive from government goods and services.

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Business taxes

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Taxes levied on businesses by federal, state, or local governments. These may include, in addition to corporate income taxes on earnings and profits, unempoyment insrance. Workmens compensation, contributions to social security, and medicare insurance

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Credits

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A direct redution of the tax owed. Credits may be allowed for purposes such as child care and the earned income credit for low-income taxpayers

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Dependent

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A person who relies on someone else for support. a dependent generally may not be the taxpayer or his or her spouse. A taxpayer may claim an exemption for a dependent if the dependency tests are met.

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Direct Tax

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A tax that cannot be shifted to others. The federal income tax is a good example of a direct tax

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Dividends

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Ordinary dividends are a corporation's distributions to its shareholders from its earnings and profits.

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Earned Income

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Includes wages, salaries, tips, and net earnings from self-employment and other income received for personal services.

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Earned Income Credit

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A refundable credit for low-income workers with childre. This credit may be paid to the worker even if no income tax was withheld from the worker's pay. To receive the earned income credit, a tax payer must file a tax return.

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Excise Taxes

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Taxes on the sale or tuse of specific products or transactions.

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Exempt (from withholding)

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Free from federal income tax withholding requirements by meeting certain income, tax liability, ande dependency criteria.

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Exempt (from Tax liability)

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Tax law provides for a set amount which taxpayers can claim for themselves. The total of the amounts is subtracted from adjusted gross income before andy tax is computed on the remaining income.

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File a return

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To file means to mail or otherwise convey to a regional IRS form-the return-on which a taxpayer has entered info about income and tax liability

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Filing status

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Based on taxpayer's marital status and other factors, the filing status determines the tax bracket and rate at which income is taxed.

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Form W-4

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A form that helps an employer determine how much to withhold from an employee's paycheck for federal income tax purposes

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Formal Tax legislation process

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the strict constitutional steps that a proposed tax must pass through before it becomes law

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Gross income

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Money, goods, and property you recieve that must be included in taxable income

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Horizontal Equity

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The concept that ppl in the same income group should pay the same amount of taxes

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Income Taxes

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Taxes on income, both earned, Income taxes can be levied both on idividuals

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indirect tax

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a tax that can be shifted tof others. the one who pays the tax to the government may be able to shif it to others

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Informal Tax Legislation Process

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Individuals and interest groups expressing and promoting their opinions about tax legislation

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interest income

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Income received from saving accounts or from lending money to someone else

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Payroll taxes

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Taxes collected from employers and employees to finance specific programs

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Personal income Tax

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a tax based on eht amount of taxable income that ppl receive annualy

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Progressvie
tax

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A tax that takes a larger percentage of income from high income groups than from low income groups

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Poperty tax

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taxes on property, especially real estate, and also boats, automobiles often paid along with license fees)

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proportional tax

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A tax that takes the same percentage of income from all income groups

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Public goods and services

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A public good is one that cannot be withheld from those who do not pay for it, and one that may be consumed by one person without reducing the amount of the product available for others.

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Redevelopment or Enterprize zone

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A government designated area that is declared in need of restoration.

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Regressive tax

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A taax that takes a larger percentage of income from low income groups than from high income groups

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Sales Taxes

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Taxes on retail produces, based on a set percentage of retail cost

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Schedule

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a form on which taxpayers list specific sources of income, or specific expenses for which they claim deductions or credits

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Standard Dedution

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an amount, fixed by law and based on filing status and age, which taxpayers may deduct from their adjusted gross income tax

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Tariff

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Taxes on products imported from foreign countries

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tax credits

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Amounts, based on certain expenitures, athat a taxpayer can deduct from taxes owed

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Tax deductions

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A persons or a business's expenses that can be deducted in determining taxable income

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Tax exemptions

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A part of a person's total income on which no tax is imposed

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Tax liability

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the amount of tax that must be paid. Tax payers meet their federal income tax liability through witholding

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tax shift

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the process that occours when a tax that has been levied on one person or group is in fact paid by others

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Tax withholding

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Money that an employer takes from an employee's paycheck and that is used to pay part or all of the employee's taxes.

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Taxable income

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The inome on which tax is computed

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Taxes

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Required payments of money to governments that are used to provide public goods and sevices for the community as a whole

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transaction taxes

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Taxes on economic transactions, such as the sale of goods and services. Such taxes can be based on a set percentage of the sales value

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Vertical Equity

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The concept that ppl in different income groups should pay different amounts of taxes

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Voluntary compliance

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A system of compliance that relies on individual citizens to report their income freely and voluntarily

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Withholding

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Money that employers withhold from emplyees' paychecks. This money is deposited for the government

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Withholding Allowance

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Claimed by an employee on form W-4. An employer uses the number of allowances claimed together with income earned and marityal status to determane how much income tax to withhold from wages.