ACC 129 Ch 1 Review

What is the tax base?

• The dollar amount upon which tax will be calculated

• The rate on the next dollar of income

• The tax proportion to apply to the base

• The total tax liability divided by taxable income

In a progressive rate structure, what happens to the tax rate as the tax base increases?

• It varies randomly

• It increases

• It stays the same

• It decreases

What is the common example of a proportional rate structure?

• Social Security tax

• State or local sales tax

• Interest

• Unemployment compensation

What is the marginal tax rate?

• The rate on the last dollar of income

• The tax proportion to apply to the base

• The rate on the next dollar of income

• The total tax liability divided by taxable income

Under a flat tax, the marginal tax rate and the average tax rate are different.

• True

• False

What is the form all taxpayers will use to file their individual income tax returns?

• Form 1065

• Form W-2

• Form 1099

• Form 1040

What is reported to employees on Form W-2?

• Interest

• Unemployment compensation

• Wages

• Taxable income

What is the standard deduction from income for single taxpayers?

• $15,000

• $10,000

• $13,850

• $27,700

What is used to determine tax liability for income over $100,000?

• Tax rate schedules

• Tax credits

• Tax tables

• Tax refunds

What do most taxpayers use to pay some or all of their tax liability prior to the due date of the return?

• Income tax withholding from their paycheck

• Tax credits

• Tax refunds

• Quarterly estimated tax payments