Exam 3: Preparing Your 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. -When matching Social Security contributions,employers pay [the same | a lesser] amount of Social Security taxes as/than the employee.

The hospitalization portion of the Social Security tax is paid on ____ of one' earned income.

From the information given below,determine Steve's gross income for tax purposes:

A person with a significant amount of investment income would have a high probability of needing to make estimated tax payments.

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 short-term capital gain would be taxed at the same rate as your salary.

The regular income tax filing deadline is April 1 of each year.

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. -Tax planning is [confined to the first quarter of the year | a year-round activity].

When a child qualifies as a dependent on her parent's return,the child cannot take a personal exemption for herself.

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. -When one gives a child an income producing asset,one is [maximizing their deductions | income shifting].

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. -There is no limit on the amount of Social Security withheld annually.

____ is not withheld from your earnings as a pay-as-you-go deduction.

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 terms "tax free" and "tax deferred" [do | do not] mean the same thing.

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. -My son,age 21,earned $5,000 last year.He still lives at home,and I provide over 50% of his support.I [can | cannot] claim him as a dependent on my tax return if he is a full time college student.

____ would be considered taxable income.

Which of the following is NOT one of the three basic categories for individual income?

For 2008,each personal exemption reduced taxable income by

The total amount that you owe for income tax in one year is your tax

Hector is a single taxpayer in the 28% marginal tax bracket.In 2008,he sold stock shares for a long-term capital gain of $8,500.He also sold some financial services stock for a long-term capital loss of $2,000.In addition,he sold the home that he had lived in for the past 3 years and experienced a $15,000 gain on the house.How much will his net capital gains (or losses)be for 2008? How much will he pay (or save)in taxes as a result of these transactions?

Diana sold mutual fund shares she had owned 4 years so that she could use the proceeds to travel across Europe with her son.Diana is in the 35% marginal tax bracket and her capital gains from this sale were $30,000.How much tax would Diana owe on those gains?

Buddy Slaton has only one itemized deduction item,the $3,000 he gave to his church.His standard deduction this year is $5,450,and he is in the 15% marginal tax bracket.How much will his contribution to the church save Buddy in taxes this year?