apply what you know\n1. why are taxes collected from individuals and businesses?\n2. why are regressive…
apply what you know\n1. why are taxes collected from individuals and businesses?\n2. why are regressive taxes considered unfair to lower - income taxpayers?\n3. how is tax avoidance different from tax evasion?\n4. how do new federal tax laws get passed?\n5. how do exemptions affect the amount of tax you will pay?\n6. which of these would reduce tax liability more—a $300 deduction or a $300 tax credit? explain.\n7. what is meant by imputed income? is it taxable?\n8. what types of adjustments can you claim to reduce your adjusted gross income?\n9. how is tax liability different from taxable income?\n10. what are deductible expenses for taxpayers who itemize?\n11. if you are married and want to deduct charitable contributions from your adjusted gross income, which tax form should you use?\n12. under what circumstances is a person required to file a tax return?\n13. why are independent contractors and other self - employed persons required to pay estimated taxes?\n14. why should you keep a copy of your tax return?
Answer
Brief Explanations:
- Taxes are collected to fund public - goods and services like infrastructure, education, and healthcare.
- Regressive taxes are considered unfair to lower - income taxpayers as they take a larger percentage of their income.
- Tax avoidance is legal use of tax laws to reduce tax liability, while tax evasion is illegal non - payment or under - payment of taxes.
- New federal tax laws are passed through the legislative process in Congress, involving proposal, committee review, voting, and presidential approval.
- Exemptions reduce the amount of income subject to tax, thus decreasing the tax amount.
- A $300 tax credit reduces tax liability more as it directly subtracts from the tax owed, while a $300 deduction reduces taxable income.
- Imputed income is non - cash income with monetary value, like employer - provided housing.
- Adjustments to gross income include contributions to certain retirement plans, student loan interest, etc.
- Tax liability is the actual amount of tax owed, while taxable income is the income on which tax is calculated.
- Deductible expenses for itemizing taxpayers include mortgage interest, state and local taxes, charitable contributions, etc.
- Married taxpayers who want to deduct charitable contributions from adjusted gross income can use Form 1040 and itemize on Schedule A.
- A person is required to file a tax return based on income level, filing status, age, and type of income.
- Independent contractors and self - employed persons pay estimated taxes as they don't have taxes withheld from their income.
- Keeping a copy of a tax return is important for record - keeping, in case of an audit, and for future financial planning.
Answer:
- To fund public goods and services.
- Because they take a larger percentage of lower - income taxpayers' income.
- Tax avoidance is legal, tax evasion is illegal.
- Through the legislative process in Congress.
- They reduce the amount of income subject to tax.
- A $300 tax credit; it directly subtracts from tax owed.
- Non - cash income with monetary value.
- Contributions to certain retirement plans, student loan interest, etc.
- Tax liability is the amount of tax owed; taxable income is income on which tax is calculated.
- Mortgage interest, state and local taxes, charitable contributions, etc.
- Form 1040 and Schedule A.
- Based on income level, filing status, age, and type of income.
- As they don't have taxes withheld from their income.
- For record - keeping, in case of an audit, and for future financial planning.