Exam 3: Preparing Your Taxes

Gross income minus tax-exempt income equals adjusted gross income.

If you do not wish to itemize deductions, the other deduction you can take is the:

Mr. and Mrs. McMurray have three children, aged 6, 12, and 18 in 2018. The McMurrays' tax liability calculated per the tax schedule is $10,000. The McMurrays' tax liability is:

From the following information, determine Marcie's gross income for tax purposes. ​

The highest marginal tax rate is currently:

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

Mr. and Mrs. Davenport, aged 40 and 38, respectively, have three children aged 3, 6, and 13. For 2019, they have  adjusted gross income (AGI)of $65,000 and unreimbursed medical expenses of $6,750. The Davenports' claim for itemized deductions for medical expenses is:

The total amount of income tax you owe in 1 year is your tax:

The Robertsons, a couple with an adjusted gross income of $28,500, decides to contribute the maximum amount possible toward their individual retirement accounts (IRAs)even though Mr. Robertson is covered by a pension plan where he works. He names his wife the beneficiary of the IRA. What is such a tax strategy called?

You made an error when you filed your tax return last year. You can correct this error by filing:

Which of the following is an illegal method of reducing your current tax liability?

Murray (age 68, single)sold his home owned for 35 years so that he could relocate to a place that is closer to where his grandchildren live. He realized a $400,000 capital gain on the home. Murray's tax liability on the capital gain is computed on:

Jamie has taxable income of $45,000. She is single, and her tax rate is 10% on the first $9,525 of the taxable income, 12% on the amount over $9,525 up to $38,700 of the taxable income, and 22% on the remainder. What are Jamie's tax liability, marginal tax rate, and average tax rate? (Show all work. Round dollar amounts to the nearest cent and percentages to two decimal places.)

Qualified dividends are taxed at the highest capital gain rates.

Molly and Jason were married. Their only dependent was Spot, their black standard poodle. Jason died in 2018. Assuming Molly does not remarry, the only legal filing status for Molly in 2019 will be:

When an individual gives his or her child an income-producing asset, he or she is:

Pete and Pam are married with four dependent children. Which of the following filing statuses can Pete and Pam use if they want to legally file one tax return?

Sarah is a homeowner and a single taxpayer. She has owned and occupied the house as a principal residence for the last 8 years. In the current taxable year, she receives a promotion. She sells her home and moves to another area. The capital gain on the sale of the principal residence will:

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 in the filed return.

Tax credits are dollar-for-dollar reductions in taxable income.