Chapter_1_Assignment

Chapter 1 Assignment Federal Income Tax 3. Congress also uses tax laws to achieve economic, political and social goals. An example being, right now the congress wants to increase employment. Congress lowers taxes and offers stimulus programs in order to give the taxpayer more money, which in turn causes more spending and creates higher demand for products. Therefore, they are creating jobs in order to provide these products and services. Last year, Congress also had a credit for energy efficient updates to homes. My parents then in turn put a geo-thermal heat source in their house, they got a credit on their taxes, and the government was trying to achieve a goal of saving energy in the U.S. 4. The basic formula for computing taxable income is the same for individuals as well as corporations. However, a individual is entitled to more types of deductions and use the expanded taxable income formula. The expanded formula includes deductions for AGI and deductions from AGI. It also subtracts credits and adds in any additional taxes an individual may have. 5. Gross Income is defined as all wealth that flows to a taxpayer from whatever source derived. It does, however, exempt some income from taxation. 7. When spouses file separate returns, both must file itemized deductions or both must file standard deductions. If one spouse itemizes, the other spouse’s standard deduction is 0. 8. When it is greater than the standard deduction. 10. a . 4420 b. 5700 c. 6800 d. 2350