Question

Ch 03: following questions regarding the U.S. tax structure. how the tax system is structured, knowing your individual filing status is important because it determines deductions and other considerations that should be taken into account when preparing your tax return. Indicate the correct filing status for each of the definitions provided.

Answer 1

Answer 1st part:

A tax structure in which additional taxable Income is taxed at higher rate is referred to as a progressive tax structure.

The tax paid on the next dollar of taxable income is referred to a the marginal tax rate.

The overall rate at which income is taxed, determined by dividing the tax liability by the taxable income is referred as the effective tax rate.

Answer 2nd part:

i. A person whose spouse died within two years of the tax year and who supports a dependent child:

Qualifying Widow(er)

ii. A person who is unmarried or legally separated from a spouse by either a separation or final divorce decree:

Single

iii. A person who is unmarried or considered unmarried and pays more than half of the cost of keeping up a home for himself / herself and an eligible child or relative:

Head of Household

iv. A couple in which each spouse files his or her own return

Married Filing Separately

v. Spouses who combine their income and allowable deductions:

Married Filing Jointly