Question 1

Which statement is true regarding a tax credit?

Accepted Answer

A) A tax credit is the same as a tax deduction. 
B) A tax credit reduces the amount of taxes owed. 
C) Medical expenses is an example of a tax credit. 
D) A tax credit reduces taxable income. 
E) A charitable contribution is an example of a tax credit. 
A) A tax credit is the same as a tax deduction. 
B) A tax credit reduces the amount of taxes owed. 
C) Medical expenses is an example of a tax credit. 
D) A tax credit reduces taxable income. 
E) A charitable contribution is an example of a tax credit.

Question 2

In 2018,the Form 1040 is not appropriate for someone who:

Accepted Answer

A) is single with no children. 
B) makes less than $50,000 with no interest or dividends. 
C) had no taxable income and no tax withheld. 
D) has a complex tax situation. 
E) has a simple tax situation. 
A) is single with no children. 
B) makes less than $50,000 with no interest or dividends. 
C) had no taxable income and no tax withheld. 
D) has a complex tax situation. 
E) has a simple tax situation.

Question 3

To minimize taxes owed,you should do the following if you expect to have a higher tax rate next year:

Accepted Answer

A) Accelerate deductions into the current year 
B) Delay the receipt of income until next year 
C) Delay deductions until next year 
D) Get a loan for the additional taxes 
E) Quit work at the end of the current year 
A) Accelerate deductions into the current year 
B) Delay the receipt of income until next year 
C) Delay deductions until next year 
D) Get a loan for the additional taxes 
E) Quit work at the end of the current year

Question 4

Mike Hansen has adjusted gross income of $82,000.During the year,Mike decided he needed a larger home.He purchased a home on a golf course in the same town as his first home.Mike incurred $6,000 in moving expenses.How much of this can he include as an itemized deduction?

Accepted Answer

A) $8,200 
B) $6,150 
C) $6,000 
D) $1,000 
E) $0 
A) $8,200 
B) $6,150 
C) $6,000 
D) $1,000 
E) $0

Question 5

The "head of household" filing status is for someone who is:

Accepted Answer

A) recently divorced. 
B) recently widowed. 
C) unmarried and has a dependent child. 
D) married but only one spouse has income. 
E) married and each spouse makes about the same income. 
A) recently divorced. 
B) recently widowed. 
C) unmarried and has a dependent child. 
D) married but only one spouse has income. 
E) married and each spouse makes about the same income.

Question 6

Al Barkley is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes.   What is Al's average tax rate?

Accepted Answer

A) 11.85% 
B) 18.27% 
C) 21.35% 
D) 23.87% 
E) 25.00% 
A) 11.85% 
B) 18.27% 
C) 21.35% 
D) 23.87% 
E) 25.00%

Question 7

Elizabeth Gleason just died.At the time of her death the total value of her assets was $150,000.The federal government collected $7,500 in taxes based on this value.What type of tax is this most likely to be?

Accepted Answer

A) General sales tax 
B) Excise tax 
C) Personal property tax 
D) Income tax 
E) Estate tax 
A) General sales tax 
B) Excise tax 
C) Personal property tax 
D) Income tax 
E) Estate tax

Question 8

One of the most frequently overlooked tax deductions is:

Accepted Answer

A) student loan interest paid by parents. 
B) real estate taxes. 
C) federal income tax you paid last spring. 
D) tax preparation fees. 
E) state income taxes. 
A) student loan interest paid by parents. 
B) real estate taxes. 
C) federal income tax you paid last spring. 
D) tax preparation fees. 
E) state income taxes.

Question 9

Tim Bridges owns a fishing boat.His state imposes an annual 3.25 percent tax on the current value of this boat.What type of tax is this most likely to be?

Accepted Answer

A) General sales tax 
B) Excise tax 
C) Personal property tax 
D) Income tax 
E) Estate tax 
A) General sales tax 
B) Excise tax 
C) Personal property tax 
D) Income tax 
E) Estate tax

Question 10

An exclusion is earnings not included in gross income.

Accepted Answer

A) True 
 B)False

Question 11

Money received in the form of dividends or interest is commonly called:

Accepted Answer

A) earned income. 
B) investment income. 
C) passive income. 
D) tax-deferred income. 
E) tax-exempt income. 
A) earned income. 
B) investment income. 
C) passive income. 
D) tax-deferred income. 
E) tax-exempt income.

Question 12

Which one of the following is most likely to qualify as an itemized deduction?

Accepted Answer

A) Interest on a credit card or charge account 
B) Charitable contributions 
C) Losses reimbursed by insurance 
D) Life insurance premiums 
E) Traffic violation fee 
A) Interest on a credit card or charge account 
B) Charitable contributions 
C) Losses reimbursed by insurance 
D) Life insurance premiums 
E) Traffic violation fee

Question 13

An exclusion affects a person's taxes by:

Accepted Answer

A) not including tax-exempt income in gross income. 
B) increasing itemized deductions. 
C) decreasing itemized deductions. 
D) decreasing the number of exemptions a person can claim. 
E) increasing the number of exemptions a person can claim. 
A) not including tax-exempt income in gross income. 
B) increasing itemized deductions. 
C) decreasing itemized deductions. 
D) decreasing the number of exemptions a person can claim. 
E) increasing the number of exemptions a person can claim.

Question 14

Mary Garcia is a U.S.citizen that worked in Mexico for part of the year and earned $50,000 while she was there.This foreign earned income will not be included in her gross income for the year.This represents a tax:

Accepted Answer

A) deduction. 
B) exclusion. 
C) exemption. 
D) credit. 
E) refund. 
A) deduction. 
B) exclusion. 
C) exemption. 
D) credit. 
E) refund.

Question 15

Taxable income is used to compute the amount of:

Accepted Answer

A) exemptions. 
B) income tax owed. 
C) deductions. 
D) capital gains. 
E) exclusions. 
A) exemptions. 
B) income tax owed. 
C) deductions. 
D) capital gains. 
E) exclusions.

Question 16

An IRA,Keogh plan,and 401(k)plan are examples of:

Accepted Answer

A) tax-exempt retirement plans. 
B) tax-deferred retirement plans. 
C) capital gains. 
D) self-employment insurance programs. 
E) job-related expenses that are tax deductible. 
A) tax-exempt retirement plans. 
B) tax-deferred retirement plans. 
C) capital gains. 
D) self-employment insurance programs. 
E) job-related expenses that are tax deductible.

Question 17

The Affordable Care Act of 2010,or Obamacare,required taxpayers to pay a tax penalty if they were not able to confirm that they had health care coverage.This penalty has been eliminated by the Tax Cuts and Jobs Act for tax years starting in:

Accepted Answer

A) 2017 
B) 2018 
C) 2019 
D) 2020 
E) 2021 
A) 2017 
B) 2018 
C) 2019 
D) 2020 
E) 2021

Question 18

Union dues,tax preparation fees,and other miscellaneous expenses are:

Accepted Answer

A) partially deductible. 
B) fully deductible. 
C) deductible for self-employed individuals only. 
D) deductible for people in certain income categories. 
E) not deductible in 2018. 
A) partially deductible. 
B) fully deductible. 
C) deductible for self-employed individuals only. 
D) deductible for people in certain income categories. 
E) not deductible in 2018.

Question 19

Estimated quarterly tax payments must be made by people who:

Accepted Answer

A) are employed in a foreign country. 
B) receive regular payroll checks. 
C) work for the government. 
D) do not have taxes withheld from their paychecks. 
E) itemize deductions. 
A) are employed in a foreign country. 
B) receive regular payroll checks. 
C) work for the government. 
D) do not have taxes withheld from their paychecks. 
E) itemize deductions.

Question 20

Randal Snyder is 55 years old,and has adjusted gross income of $40,000.He has medical expenses for the year ending 2018 of $7,000.How much of these expenses can he include as an itemized deduction?

Accepted Answer

A) $0 
B) $3,000 
C) $4,000 
D) $6,000 
E) $7,000 
A) $0 
B) $3,000 
C) $4,000 
D) $6,000 
E) $7,000

Which statement is true regarding a tax credit?

In 2018,the Form 1040 is not appropriate for someone who:

To minimize taxes owed,you should do the following if you expect to have a higher tax rate next year:

Mike Hansen has adjusted gross income of $82,000.During the year,Mike decided he needed a larger home.He purchased a home on a golf course in the same town as his first home.Mike incurred $6,000 in moving expenses.How much of this can he include as an itemized deduction?

The "head of household" filing status is for someone who is:

Al Barkley is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes. What is Al's average tax rate?

Elizabeth Gleason just died.At the time of her death the total value of her assets was $150,000.The federal government collected $7,500 in taxes based on this value.What type of tax is this most likely to be?

One of the most frequently overlooked tax deductions is:

Tim Bridges owns a fishing boat.His state imposes an annual 3.25 percent tax on the current value of this boat.What type of tax is this most likely to be?

An exclusion is earnings not included in gross income.

Money received in the form of dividends or interest is commonly called:

Which one of the following is most likely to qualify as an itemized deduction?

An exclusion affects a person's taxes by:

Mary Garcia is a U.S.citizen that worked in Mexico for part of the year and earned $50,000 while she was there.This foreign earned income will not be included in her gross income for the year.This represents a tax:

Taxable income is used to compute the amount of:

An IRA,Keogh plan,and 401(k)plan are examples of:

The Affordable Care Act of 2010,or Obamacare,required taxpayers to pay a tax penalty if they were not able to confirm that they had health care coverage.This penalty has been eliminated by the Tax Cuts and Jobs Act for tax years starting in:

Union dues,tax preparation fees,and other miscellaneous expenses are:

Estimated quarterly tax payments must be made by people who:

Randal Snyder is 55 years old,and has adjusted gross income of $40,000.He has medical expenses for the year ending 2018 of $7,000.How much of these expenses can he include as an itemized deduction?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters

Exam 4: Planning Your Tax Strategy

Which statement is true regarding a tax credit?

In 2018,the Form 1040 is not appropriate for someone who:

To minimize taxes owed,you should do the following if you expect to have a higher tax rate next year:

Mike Hansen has adjusted gross income of $82,000.During the year,Mike decided he needed a larger home.He purchased a home on a golf course in the same town as his first home.Mike incurred $6,000 in moving expenses.How much of this can he include as an itemized deduction?

The "head of household" filing status is for someone who is:

Al Barkley is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes. What is Al's average tax rate?

Elizabeth Gleason just died.At the time of her death the total value of her assets was $150,000.The federal government collected $7,500 in taxes based on this value.What type of tax is this most likely to be?

One of the most frequently overlooked tax deductions is:

Tim Bridges owns a fishing boat.His state imposes an annual 3.25 percent tax on the current value of this boat.What type of tax is this most likely to be?

An exclusion is earnings not included in gross income.

Money received in the form of dividends or interest is commonly called:

Which one of the following is most likely to qualify as an itemized deduction?

An exclusion affects a person's taxes by:

Mary Garcia is a U.S.citizen that worked in Mexico for part of the year and earned $50,000 while she was there.This foreign earned income will not be included in her gross income for the year.This represents a tax:

Taxable income is used to compute the amount of:

An IRA,Keogh plan,and 401(k)plan are examples of:

The Affordable Care Act of 2010,or Obamacare,required taxpayers to pay a tax penalty if they were not able to confirm that they had health care coverage.This penalty has been eliminated by the Tax Cuts and Jobs Act for tax years starting in:

Union dues,tax preparation fees,and other miscellaneous expenses are:

Estimated quarterly tax payments must be made by people who:

Randal Snyder is 55 years old,and has adjusted gross income of $40,000.He has medical expenses for the year ending 2018 of $7,000.How much of these expenses can he include as an itemized deduction?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters