Exam 3: Preparing Your Taxes

Mr.and Mrs.Davenport have three children ages 3,6,and 13.Their financial matters for 2008 are as follows: How much would the Davenports' medical expenses contribute to their total itemized deductions?

Shawn earned $65,000 in 2008.How much was his social security tax? How much would his employer pay in social security taxes for Shawn? (Show all work. )

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -A husband and wife would be the only couple combination that could file a joint return.

Your take-home pay is what you are left with after subtracting withholdings from your

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The major source of revenue for the federal government is [income | Social Security] taxes.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -If you are claimed as a dependent on your parents' tax return,you [may also | may not] claim yourself on your tax return.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Recent changes in the tax law have lessened the severity of the marriage tax penalty.

Local governments get most of their tax revenue from

Adjustments to income will decrease your taxable income.

Connie is a 20 year old college student who earned $8,000 and spent it all on her support during the year.Her parents may claim her as a tax dependent as long as

If you earn less than $15,000,you probably pay more in social security taxes than in federal income taxes.

Which of the following are legal methods of reducing your current tax liability?

You should itemize deductions when total itemized deductions are less than the standard deduction.

The federal government gets the majority of its revenue from the ____ tax.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Dividends received from the stock you own will be taxable income.

A capital gain is the result of

Mandi and Thomas were married and had one child,age 7.Mandi died in 2004 leaving Thomas a single parent.In 2005,the most favorable filing status for Thomas will be

Municipal bond investments typically provide tax-free interest income.

Tax-deferred income is better than tax-free income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The Congress writes and passes the Internal Revenue Code.