Learning Goals

The basic principles of income taxes include determining your filing status. What is one of the main filing statuses?

• Single

• Married Filing Jointly

• Head of Household

• All of the above

Describe the sources of gross income and adjustments to income, differentiate between standard and itemized deductions and exemptions, and calculate taxable income.

• Gross income includes wages, dividends, and interest; adjustments include contributions to retirement accounts.

• Standard deductions are fixed amounts; itemized deductions are specific expenses like medical costs.

• Exemptions reduce taxable income based on the number of dependents.

• Taxable income is calculated by subtracting deductions and exemptions from gross income.

Prepare a basic tax return using the appropriate tax forms and rate schedules.

• Use Form 1040 and refer to the IRS tax rate schedules.

• Use Form W-2 and refer to the state tax rate schedules.

• Use Form 1099 and refer to the federal tax rate schedules.

• Use Form 1040EZ and refer to the local tax rate schedules.

Explain who needs to pay estimated taxes, when to file or amend your return, and how to handle an audit.

• Individuals with significant income not subject to withholding

• Only salaried employees

• People who do not earn any income

• Everyone, regardless of income

Know where to get help with your taxes and how software can make tax return preparation easier.

• Tax professionals and tax software

• Local library and bookstores

• Online shopping websites

• Social media platforms

Implement an effective tax planning strategy.

• Develop a comprehensive financial plan

• Ignore tax regulations

• Spend all income

• Avoid saving

What are the two groups into which people who complain about taxes can be divided, according to the passage?

• Those who think taxes are too high and those who think taxes are unfair

• Those who want tax reforms and those who evade taxes

• Those who understand tax benefits and those who don't

• Those who pay taxes and those who don't

What areas of financial planning are mentioned in the passage that taxes affect?

• Investments and savings

• Retirement and estate planning

• Insurance and risk management

• All of the above

What should you be able to do after reading the chapter, as mentioned in the passage?

• Understand the main concepts

• Summarize the chapter

• Apply the knowledge in real-life scenarios

• Answer all the questions at the end

Every individual or married couple is required to file a federal income tax return regardless of the amount of income earned.

• True

• False