$7.$ Tax$-$planning concepts

Important concepts to help you manage your taxes successfully include understanding how taxes are calculated; identifying your marginal tax rate; using appropriate strategies to avoid overpaying income taxes; and knowing what records to keep.

Identify the term that best applies to each of the following concepts or definitions.

Concept or Definition

Term

The proportion of total income paid in income taxes

The net income received from the sale of a capital asset above the costs incurred to purchase and sell it

Tax$-$deductible expenses

A tax rate that decreases as taxable income increases

Deliberately and willfully hiding income from the IRS, falsely claiming deductions, or otherwise cheating the government out of taxes owed; it is illegal