ACC331 Cheat Sheet Exam 1
Chapter 1
Horizontal Equity- equally situated persons pay equal taxes. Where income tax wins.
Vertical Equity- Persons with different amounts of income pay different amounts of tax.
16th amendment-the congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
Statute of Limitations- federal 3 years regular, 6 years-omit>25% of gross income, none-fraud. State may be different, Michigan regular is 4.
FICA(federal insurance contributions act)-social security tax -social security 6.2% 2010 4.2% 2011. Base amount is 106,800 -medicare 1.45%
FUTA(federal unemployment tax act) 6.2% on first $7,000 of wages
Chapter 3
Basic Tax Structure
-Economic income (+)only place where u add stuff when determining GI
-Gross Income
-Adjusted Gross Income (-)
-Taxable Income (-)
-Tax (-)
-Tax Due (-)
Tax Formula for Individuals
Income
Less:exclusions
GI
Less:deductions for AGI
Adjusted Gross Income
Less: the greater of
Total itemized deductions
Or standard deduction
Less: personal and dependency exemptions
Taxable income
Tax on taxable income
Less:tax credits
Tax due (or refund)

*economic income---- exclusions
*gross income—deductions for AGI
AGI
-itemized deductions or standard deduction *itemized deductions are related to production or collection of income and management of property held for the production of income. *Standard deduction: 2010 2011 single 5700 5800 married,filing j 11400 11600 surviving spouse 11400 11600 head of house 8400 8500 married,filing sep 5700 5800

*amount of each additional standard deduction 2010 2011 single 1400 1450 married filing j 1100 1150 surviving spouse 1100 1150 head of house 1400 1450 married filing