NGPF - Taxes Test Questions with Correct Answers Latest Update

NGPF - Taxes Test Questions with Correct Answers Latest Update 1040 - Answers The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns. 1099 - Answers A form that details all "non-employee" compensation, including for specific jobs like freelancers or contractors Audit - Answers An inspection of a filer's tax return by the IRS Capital Gain - Answers Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for Corporate Income Tax - Answers A percentage of profits paid by a business to the federal and state government Dependent - Answers Someone you financially support who can be "claimed" on a tax return to reduce your taxable income and lower your taxes Discretionary Spending - Answers Spending by the federal government determined by legislative action and approved through votes by elected officials Dividend - Answers Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis Earned income - Answers Any income (wages/salary) that is generated by working Effective Tax Rate - Answers The actual rate you pay on your taxes, as a percentage of your overall income. Excise Tax - Answers A tax paid on purchases of a specific good, like gasoline or cigarettes Exemption - Answers The set amount of money, per dependent, you can subtract from your taxable income Federal Insurance Contributions Act (FICA) - Answers A federal law that requires an employer to withhold taxes from the wages they pay their employees; the funds go toward Social Security and Medicare Filing Status - Answers A category that defines the type of tax return an individual will use, primarily based on marital status; it also determines the size of your tax brackets and how much of your income is taxed at each rate