Exam 3: Preparing Your Taxes

You have no employer provided pension plan;your IRA contributions are treated as

State income taxes and real estate taxes are both itemized deduction items.

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 ask the IRS a tax question and are given an incorrect answer,[you will still have to pay any additional tax owed | the IRS will forgive any additional taxes].

On which of the following types of income would you normally have income tax withheld?

Income shifting refers to the process of transferring income from the taxpayer to the IRS.

Income tax refunds are automatically sent to those who qualify for refunds no later than April 15.

If you are married,you can legally file a single tax return.

____ would not be considered taxable income.

If you are eligible to receive a tax refund,you will have to file a tax return to get the refund.

A ____ would be most likely to have to pay estimated taxes.

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. -Excise taxes are similar to [real estate | sales] taxes.

Tax credits reduce your

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 special tax provision reduced the social security portion for the individual taxpayer by [1% | 2%] in 2011 and 2012.

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. -You will have to list and be able to prove [standard | itemized] deductions if audited.

A married couple filing a joint return has Ms.Cindy Cook,a CPA,complete their return.The IRS will hold only Ms.Cook responsible for any errors on the return.

Estimated tax payments must be made by those who do not have taxes deducted from their earnings.

Mr.and Mrs.McMurray have three children ages 3,6,and 12 for which they paid $6,000 in child care expenses this year.Assume the McMurray's tax liability is initially calculated to be $10,000.Then apply a 20% tax credit for child care expenses within limits normally allowed.How much will their final tax liability be?

Typically state governments get most of their tax revenue from

Shawn earned $65,000.If the total Social Security tax rate is 15.3% then how much was his social security tax? How much would his employer pay in social security taxes for Shawn? (Show all work.)

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 earn less than $15,000,you likely pay more in [federal income tax | social security taxes].