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Fill in the missing word(s) in the space provided at the right.

|Example: Money in this country is collected from citizens and redistributed according to priorities determined by |Congress |

|______. | |

|1. Money collected by the government from various sources is known as ______. | |

|2. A tax that increases in proportion to increases in income is known as a(n) ______tax. | |

|3. Money earned by individuals that is subject to taxation is called ______income. | |

|4. In order to avoid itemizing deductions, a person may elect to take the ______, which is a flat amount. | |

|5. Money paid to a former spouse (which is taxable income) for that person’s support is called _______. | |

|6. Money paid to a former spouse (which is not taxable income) for the support of dependent children is called _______. | |

|7. Expenses that can be subtracted from gross income are called _______. | |

|8. The amount remaining when adjustments are subtracted from gross income is called ______. | |

|9. When all sources of taxable income are added together, the total is called ________income. | |

|10. An amount that can be subtracted from your income for each person who depends on your income to live is a(n) | |

|_________. | |

|11. A(n) _________ tax allows a higher-income person to pay a lower percentage of income in taxes than a lower-income | |

|person. | |

|12. To intentionally fail to pay taxes owed is to commit a serious crime called _________. | |

|13. A tax system that is based on _________ requires all citizens to be responsible for preparing and filing their tax | |

|returns on time and paying taxes due. | |

|14. A type of tax for which the rate stays the same regardless of income is called _________. | |

|15. A(n) _________ is an amount subtracted directly from tax owed. | |

|16. An administrative agency of the federal government that collects taxes and enforces tax laws is the _________. | |

|17. An examination of tax returns by the IRS is called a(n) _________. | |

After each of the following statements, select T for a true statement or F for a false statement.

|1. The income tax is an example of a progressive tax. |1. _________ |

|2. Unemployment compensation benefits received are taxable to the person who receives them. |2. _________ |

|3. The power to levy federal income taxes rests with the U.S. Congress. |3. _________ |

|4. You may not use short Form 1040EZ for a joint return if your total taxable income is $20,000 or more. |4. _________ |

|5. Only a married person is considered a head of household. |5. _________ |

|6. Alimony is taxable to the person receiving it and is deductible to the one paying it. |6. _________ |

|7. Money received in the form of wages, tips, salaries, or interest is taxable income. |7. _________ |

|8. A taxpayer’s filing status is unrelated to his or her marital status. |8. _________ |

|9. The Internal Revenue Service is an agency of the Department of the Treasury. |9. _________ |

|10. You can file an amended tax return (1040X) if you discover you made an error. |10. _________ |

On the line at the right of each sentence, print the letter that represents the word or group of words correctly completing the sentence or answering the question.

1. To compute your tax liability, turn to the tax tables and look up the amount called

(a) take-home pay, (b) gross income, (c) adjusted gross income, (d) taxable income. 1. _________

2. Which of these is a form of flat tax? (a) income tax, (b) sales tax, (c) property tax, (d) excise tax 2. _________

3. Tax returns must be filed by _____ of the following year. (a) January 1, (b) January 31,

(c) April 15, (d) December 31 3. _________

4. As an alternative to itemizing deductions, taxpayers may (a) file Form1040EZ,

(b) file Form 1040A, (c) claim the standard deduction, (d) claim more exemptions. 4. _________

5. A sales tax on specific products and services is the ____ tax. (a) income,(b) property, (c) excise,

(d) flat 5. _________

6. What is a type of IRS audit requiring a taxpayer to appear in person and bring records?

(a) correspondence, (b) office, (c) field, (d) research 6. _________

7. For people who use Form 1040EZ or 1040A, the IRS allows (a) electronic filing of tax returns,

(b) electronic payment of taxes due, (c) both of these, (d) neither of these. 7. _________

8. Student loan interest and tuition can be listed as _____ on Form 1040A.

(a) exemptions, (b) adjustments to gross income, (c) tax credits, (d) taxable income 8. _________

Activity 7.1 Form 1040EZ

Directions: Complete the Form 1040EZ (Download from or my website), based on this information:

• Georgina B. Bales,

• 485 West 11th Avenue, Ogden, UT 87666-6723

• Her Social Security number is 999-00-8478

• She wants $3 to go to the campaign fund.

• She is single and claims herself (no one else can claim her)

• As a clerk, she earned $16,500 last year, plus $200 interest on savings. Taxes withheld were $1,016. (Refer to Figure 7.3 in your textbook for the tax table)

• Print out form when complete and turn in with this activity.

Activity 7.2 Form 1040EZ

Directions: Complete the Form 1040EZ (Download from or my website), based on this information:

• Ronald B. Mitchell

• 218 SW 82d Avenue, Portland, OR 97262-8645.

• His Social Security number is 999-00-3833.

• He works part-time while attending college but is not claimed on another person’s return.

• He earned $10,000 in salary and $450 in tips (shown on his W-2).

• He is single and claims himself as an exemption.

• He has $200 interest from savings and $400 withheld in taxes.

• He does not wish to give $3 to the campaign fund. (Refer to Figure 7.3 in your textbook for the tax table.)

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