Exam 3: Preparing Your Taxes

Tax preparers must be licensed by either the state of federal government.

Pete and Pam are married with four dependent children.Pete and Pam can legally file using which of the following filing statuses?

George has the following expenses that he wants to include as itemized deductions for the year.His adjusted gross income is $60,000.What is the total itemized deduction he can take? (Show all work.)

Who would be most likely to have to pay estimated taxes?

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?

Ben and Jack both earned $60,000 this year.Ben (age 30)is married with two children,and Jack (age 68)is single with no dependents.Which of the following is true regarding the amount of Social Security taxes they will pay?

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 common name for Federal Insurance Contribution Act payments is [income taxes | social security].

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 [avoidance | evasion] is a perfectly legal practice.

A declaration of estimated taxes is made by filing A) Schedule B. B) Form 1040 EZ. C) Schedule Z. D) Form 1040 ES. E) Form 1040 A.

Opening a traditional IRA would allow you to defer taxes on the earning.

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 IRS definition of [gross | adjusted] income is "all income that is subject to federal taxes."

Child support received is included in gross income.

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 standard or itemized deduction,reduces the taxpayer's [taxable income | taxes due].

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 highest marginal tax rate is currently [35% | 28%].

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. -Earnings from real estate investments are an example of [active | passive] income.

Mandi and Thomas were married and had one child,age 7.Mandi died in 2011 leaving Thomas a single parent.In 2012,the most favorable filing status for Thomas will be

____ would be considered taxable income.

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. -Interest you paid on your [vacation home | stereo] loan could be deducted.

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

Social security taxes are paid on earned income but not on investment income.