Ch. 5 Planning Your Tax Strategy Flashcards
How much of each dollar goes towards taxes?
1/3
What are three goals related to tax planning?
Three goals related to tax planning are: knowing the current tax laws and regulations that affect you,
maintaining complete and appropriate tax records, and making purchase/investment decisions that reduce your tax liability.
What are the four most common taxes that people pay?
- Taxes on purchases
- Taxes on property
- Taxes on wealth
- Taxes on earnings
What are Taxes on Purchases?
Taxes added on the price of products
What is Excise tax?
Taxes on specific goods/services (ex. cigarettes, gasoline, alcohol, etc).
What are Taxes on Property?
Taxes on the value of land and buildings
What are Personal Property Taxes?
Taxes placed on personal assets like automobiles, boats, furniture, and farm equipment.
What are Taxes on Wealth?
Taxes placed on a person’s wealth after they die.
What are Estate taxes?
Tax on the value of a person’s property at the time of his/her death
What are inheritance taxes?
Tax that an heir must pay before receiving a deceased person’s property
What are Taxes on Earnings?
Taxes placed on wages
What are Social Security taxes?
Taxes that fund the old age, survivors, and disability insurance portion of Social Security
What are Income Taxes?
Taxes on a person’s wages
