Question 1

Which of the following statements regarding enrolled agents is true?

Accepted Answer

A) They are tax professionals who advise only professionals in tax planning. 
B) They are taxpayers with relatively common types of income and expenditure. 
C) They are federally licensed individual tax practitioners. 
D) They are lawyers who specialize in tax planning. 
E) They are federal agents who collect taxes from taxpayers. 
A) They are tax professionals who advise only professionals in tax planning. 
B) They are taxpayers with relatively common types of income and expenditure. 
C) They are federally licensed individual tax practitioners. 
D) They are lawyers who specialize in tax planning. 
E) They are federal agents who collect taxes from taxpayers.

Question 2

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

Accepted Answer

Steve's gross income for tax p

Question 3

Which of the following private tax preparers are required to pass an exam administered by the Internal Revenue Service (IRS)?

Accepted Answer

A) National and local tax services 
B) Certified public accountants (CPAs) 
C) Enrolled agents (EAs) 
D) Tax attorneys 
E) Corporate managers 
A) National and local tax services 
B) Certified public accountants (CPAs) 
C) Enrolled agents (EAs) 
D) Tax attorneys 
E) Corporate managers

Question 4

Payments under the provisions of the Federal Insurance Contributions Act (FICA)are also known as:

Accepted Answer

A) income tax. 
B) Social Security tax. 
C) property tax. 
D) capital gains tax. 
E) marginal tax. 
A) income tax. 
B) Social Security tax. 
C) property tax. 
D) capital gains tax. 
E) marginal tax.

Question 5

Mark is not married and has dependent parents. He pays more than half of the cost of keeping a home for himself and his parents. His tax filing status is:

Accepted Answer

A) single taxpayer. 
B) married filing jointly. 
C) married filing separately. 
D) head of household. 
E) qualifying widow. 
A) single taxpayer. 
B) married filing jointly. 
C) married filing separately. 
D) head of household. 
E) qualifying widow.

Question 6

A _____ would most likely have to pay estimated taxes.

Accepted Answer

A) school teacher 
B) manager for an industrial firm 
C) self-employed plumber 
D) union worker 
E) corporate attorney 
A) school teacher 
B) manager for an industrial firm 
C) self-employed plumber 
D) union worker 
E) corporate attorney

Question 7

A capital gain is the result of:

Accepted Answer

A) selling an asset for less than its purchase price. 
B) holding an asset that has depreciated. 
C) selling an asset at its purchase price. 
D) selling an asset for more than its purchase price. 
E) buying a new asset at a rate lower than the market rate of the asset. 
A) selling an asset for less than its purchase price. 
B) holding an asset that has depreciated. 
C) selling an asset at its purchase price. 
D) selling an asset for more than its purchase price. 
E) buying a new asset at a rate lower than the market rate of the asset.

Question 8

A tax credit could result from:

Accepted Answer

A) owning a home. 
B) adopting a child. 
C) charitable contributions. 
D) investing in municipal bonds. 
E) dental expenses. 
A) owning a home. 
B) adopting a child. 
C) charitable contributions. 
D) investing in municipal bonds. 
E) dental expenses.

Question 9

Your take-home pay is what you are left with after subtracting withholdings from your:

Accepted Answer

A) gross earnings. 
B) net earnings. 
C) taxable income. 
D) adjusted gross income. 
E) tax-exempt income. 
A) gross earnings. 
B) net earnings. 
C) taxable income. 
D) adjusted gross income. 
E) tax-exempt income.

Question 10

Sue and Tim are married taxpayers in the 32% marginal tax bracket. In 2018, they sold common stock shares, which they held for more than 3 months, for a capital gain of $3,800. They also sold some technology stock for a short-term capital loss of $9,000. In addition, they sold the home they had lived in for the past 10 years and experienced a $75,000 gain on the house. How much will their net capital gains (or losses)be for 2018? How much will they pay (or save)in taxes as a result of these transactions?

Accepted Answer

The net loss is $5,200 ($9,000 - $3,800)

Question 11

Russ and Lois were married on December 30. Even though they were single for most of the year, they can legally file as married filing jointly taxpayers in the year of the wedding.

Accepted Answer

A) True 
 B)False

Question 12

_____ would be considered a part of your taxable income.

Accepted Answer

A) Your (individual retirement account)IRA contributions 
B) A gift from your aunt 
C) Your child-support payments 
D) A gain from the sale of your assets 
E) Your tuition scholarship 
A) Your (individual retirement account)IRA contributions 
B) A gift from your aunt 
C) Your child-support payments 
D) A gain from the sale of your assets 
E) Your tuition scholarship

Question 13

In 2018, the total FICA tax rate was:

Accepted Answer

A) 6.0%. 
B) 6.75 %. 
C) 7.25 %. 
D) 13.4 %. 
E) 15.3 %. 
A) 6.0%. 
B) 6.75 %. 
C) 7.25 %. 
D) 13.4 %. 
E) 15.3 %.

Question 14

Your income tax withholding is dependent on:

Accepted Answer

A) your age and educational qualification. 
B) the number of deductions claimed by your spouse. 
C) your income level and the number of withholding allowances you have claimed. 
D) the number of standard deductions you have claimed. 
E) the number of withholding allowances allowed by your employer. 
A) your age and educational qualification. 
B) the number of deductions claimed by your spouse. 
C) your income level and the number of withholding allowances you have claimed. 
D) the number of standard deductions you have claimed. 
E) the number of withholding allowances allowed by your employer.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Based on the given information, what is Max's portfolio income?

Accepted Answer

A) $13,000 
B) $6,000 
C) $8,000 
D) $16,000 
E) $18,000 
A) $13,000 
B) $6,000 
C) $8,000 
D) $16,000 
E) $18,000

Question 17

All taxpayers have an equal probability of having their tax returns audited.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is subject to federal income tax?

Accepted Answer

A) The tax credit earnings on a Roth IRA 
B) Municipal bond interest 
C) Child-support payments 
D) Tips received 
E) Personal exemptions 
A) The tax credit earnings on a Roth IRA 
B) Municipal bond interest 
C) Child-support payments 
D) Tips received 
E) Personal exemptions

Question 19

Peter's tax computed per the tax rate schedule amounts to $2,000, and his tax credits amount to $500. His total tax liability is:

Accepted Answer

A) $2,500. 
B) $1,500. 
C) $3,000. 
D) $2,200. 
E) $4,000. 
A) $2,500. 
B) $1,500. 
C) $3,000. 
D) $2,200. 
E) $4,000.

Question 20

Which of the following statements regarding tax credits is true?

Accepted Answer

A) They are deductions that depend on the taxpayer's filing status, age, and vision and that can be claimed by a taxpayer whose total itemized deductions are small. 
B) They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income. 
C) They represent the income remaining after subtracting all allowable adjustments to income from the gross income. 
D) They are personal expenditures that can be deducted from adjusted gross income when determining taxable income. 
E) They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due. 
A) They are deductions that depend on the taxpayer's filing status, age, and vision and that can be claimed by a taxpayer whose total itemized deductions are small. 
B) They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income. 
C) They represent the income remaining after subtracting all allowable adjustments to income from the gross income. 
D) They are personal expenditures that can be deducted from adjusted gross income when determining taxable income. 
E) They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due.

Which of the following statements regarding enrolled agents is true?

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

Which of the following private tax preparers are required to pass an exam administered by the Internal Revenue Service (IRS)?

Payments under the provisions of the Federal Insurance Contributions Act (FICA)are also known as:

Mark is not married and has dependent parents. He pays more than half of the cost of keeping a home for himself and his parents. His tax filing status is:

A _____ would most likely have to pay estimated taxes.

A capital gain is the result of:

A tax credit could result from:

Your take-home pay is what you are left with after subtracting withholdings from your:

Russ and Lois were married on December 30. Even though they were single for most of the year, they can legally file as married filing jointly taxpayers in the year of the wedding.

_____ would be considered a part of your taxable income.

In 2018, the total FICA tax rate was:

Your income tax withholding is dependent on:

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

Based on the given information, what is Max's portfolio income?

All taxpayers have an equal probability of having their tax returns audited.

Which of the following is subject to federal income tax?

Peter's tax computed per the tax rate schedule amounts to $2,000, and his tax credits amount to $500. His total tax liability is:

Which of the following statements regarding tax credits is true?

Understanding the Financial Process

Using Financial Statements and Budgets

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 3: Preparing Your Taxes

Which of the following statements regarding enrolled agents is true?

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

Which of the following private tax preparers are required to pass an exam administered by the Internal Revenue Service (IRS)?

Payments under the provisions of the Federal Insurance Contributions Act (FICA)are also known as:

Mark is not married and has dependent parents. He pays more than half of the cost of keeping a home for himself and his parents. His tax filing status is:

A _____ would most likely have to pay estimated taxes.

A capital gain is the result of:

A tax credit could result from:

Your take-home pay is what you are left with after subtracting withholdings from your:

Russ and Lois were married on December 30. Even though they were single for most of the year, they can legally file as married filing jointly taxpayers in the year of the wedding.

_____ would be considered a part of your taxable income.

In 2018, the total FICA tax rate was:

Your income tax withholding is dependent on:

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

Based on the given information, what is Max's portfolio income?

All taxpayers have an equal probability of having their tax returns audited.

Which of the following is subject to federal income tax?

Peter's tax computed per the tax rate schedule amounts to $2,000, and his tax credits amount to $500. His total tax liability is:

Which of the following statements regarding tax credits is true?

Understanding the Financial Process

Using Financial Statements and Budgets

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters