Personal Finance - Chapter 3 Vocab (Taxes)

The amount of income remaining after subtracting all allowable adjustments to income from gross income.

• adjusted gross income (AGI)
• income shifting
• estimated taxes
• income taxes

Allowable deductions from gross income, including certain employee, personal retirement, insurance, and support expenses

• adjustments to gross income
• tax audit
• exemptions
• average tax rate

A tax return filed to adjust for information received after the filing date of the taxpayer’s original return or to correct errors

• amended return
• adjusted gross income (AGI)
• progressive tax structure
• estimated taxes

The rate at which each dollar of taxable income is taxed on average

• average tax rate
• gross income
• standard deduction
• itemized deductions

Tax payments required on income not subject to withholding that are paid in four installments

• estimated taxes
• income taxes
• tax audit
• adjusted gross income (AGI)

Deductions from AGI based on the number of persons supported by the taxpayer’s income

• exemptions
• marginal tax rate
• tax credits
• standard deduction

The law establishing the combined Old-Age, Survivor’s, Disability, and Hospital Insurance tax levied on both employer and employee

• Federal Insurance Contributions Act or Social Security tax
• estimated taxes
• adjustments to income
• amended return

Taxes that an employer deducts from the employee’s gross earnings each pay period

• federal withholding taxes
• exemptions
• average tax rate
• marginal tax rate

The total of all of a taxpayer’s income (before any adjustments, deductions, or exemptions) subject to federal taxes

• gross income
• standard deduction
• federal withholding taxes
• adjustments to gross income

A technique used to reduce taxes in which a taxpayer shifts a portion of income to relatives in lower tax brackets.

• income shifting
• tax credits
• exemptions
• gross income