Exam 4: Using Tax Concepts for Planning

Michael's brother, Thomas, lives with Michael in his own home. Thomas has a full-time job and pays his brother for rent and utilities. Michael's filing status is

Jerry is divorced and has two children that live with him. What filing status should Jerry claim on his tax return?

Which of the following is not a tax filing status option?

Tax laws allow substantial tax benefits for parents who wish to set aside money for their children's future college expenses.

The standard deduction for single taxpayers in 2018 is $12,500.

Knowledge of tax laws can help you conserve your income.

Taxpayers will choose to take the standard deduction because

A young couple buying a home would always be better off taking the standard deduction rather than itemizing deductions.

Assuming you are married and taking the standard deduction, is it better to file separately or jointly?

Medicare taxes are 1.45% of your salary, regardless of the salary amount.

A branch of the U.S. Treasury Department, called the ________, administers the federal tax system.

Which of the following is not a tax credit mentioned in the chapter?

Comment on your level of knowledge to prepare your taxes. Do you need to hire a CPA or can you prepare them? Are you going to invest in any software that helps you prepare your return?

Itemized deductions can include mortgage interest expense, state income tax expense, charitable contributions, and other employee expenses.

All taxpayers have a large degree of freedom in choosing their filing status.

The knowledge of tax laws can help you

The standard deduction for married taxpayers in 2018 is $25,000.

Your gross wages are subject to FICA (Federal Insurance Contributions Act) taxes that fund the Social Security system and Medicare.

There is no Social Security tax on income beyond a certain level.

Which item below cannot be taken as an itemized deduction?