Question

4. Vocabulary - Terminology for components of taxable income Components to Taxable Income Terminology Match the terms relating to the basic terminology and concepts of personal taxation on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer Adjustments Adjusted gross income Deductions Standard deduction Description A. This is used to calculate limits for certain itemized deductions. B. This figure is based on tax bracket, 5% to 15% tax rate if held over 12 months. C. This can be either standard or itemized. D. Examples of this term include charitable deductions, state and local taxes, and moving expenses. E. This is adjusted annually for changes in cost of living. F. This term equals gross income less adjustments. G. Taken against gross income, they result in AGI. H. Reduce AGI by the standard deduction and allowable exemptions. I. These are charitable contributions. J. This can be claimed if taxpayer provides more than half their support. Itemized deduction Exemption Itemized deduction example Capital gains tax categories Steps to AGI Steps to taxable income Grade It Now Save & Continue Continue without saving

Answer 1

a) Adjustments - Taken against gross income, they result in AGI

b) Adjusted gross income - This is used to calculate limits for certain itemized deductions

c) Deductions - This can be either standard or itemized

d) Standard deduction - This is adjusted annually for changes in cost of living

e) Itemized deduction - These are charitable contributions.

f) Exemption - This can be claimed if taxpayer provides more than half their support.

g) Itemized deduction example - Examples of this term include charitable deductions, state and local taxes, and moving expenses

h) Capital gain categories - This figure is based on tax bracket, 5% to 15% tax rate if held over 12 months

i) Steps to AGI - This term includes gross income less adjustments

j) Steps to taxable income - Reduce AGI by the standard deduction and allowable exemptions.