Taxes Vocabulary

What is the amount not included in gross income?

• Exclusion

• Tax Shelter

• Marginal Tax Rate

• Average Tax Rate

Match the vocabulary to the correct definition.

• Earned Income

• Income resulting from business activities in which you do not actively participate

• Adjusted Gross Income

• Money received for person effort, such as wages or salary

• Taxable Income

• Money received in the form of dividends, interest, or rent

• Passive Income

• Gross income reduced by certain adjustments such as contributions to IRA

• Investment Income

• The net amount of income, after allowable deductions on which income tax is computed

What is the total tax due divided by the taxable income?

• Exclusion

• Tax Shelter

• Marginal Tax Rate

• Average Tax Rate

Match the vocabulary to the correct definition.

• Excise Tax

• A tax levied on the value of property bequeathed by a deceased person

• Estate Tax

• A tax imposed on the value of a persons property at the time of death

• Inheritance Tax

• A tax imposed on specific goods and services

What is an investment that provides immediate tax benefits and a reasonable expectation of a future financial return?

• Exclusion

• Tax Shelter

• Marginal Tax Rate

• Average Tax Rate

Match the vocabulary word to the correct defintion.

• Standard Deduction

• Amount subtracted from adjusted gross income to get taxable income

• Itemized Deduction

• Expenses that can be deducted from adjusted gross income

• Tax Deduction

• A set amount on which no taxes are paid

Match the vocabulary to the definition.

• Tax Credit

• Amount subtracted directly from the amount of taxes owed to reduce taxes owed

• Tax Audit

• A detailed examination of your tax return by the IRS

• Tax Avoidance

• Use of illegal means to reduce one's taxes

• Tax Evasion

• Use of legitimate methods to reduce one's taxes