Question 1

The Internal Revenue Service (IRS) will compute taxes for those whose taxable income is less than $100,000 and who do not itemize deductions.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following determines the amount of income subject to federal income taxes?

Accepted Answer

A)  Marginal tax rate 
B)  Tax-deferred income 
C)  Adjusted gross income (AGI) 
D)  Active income 
E)  Reported taxable income 
A)  Marginal tax rate 
B)  Tax-deferred income 
C)  Adjusted gross income (AGI) 
D)  Active income 
E)  Reported taxable income

Question 3

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.)

Accepted Answer

Tax Liability = (10% × $9,525) + [12% ×

Question 4

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 statements regarding the amount of Social Security taxes they will have to pay is true?

Accepted Answer

A)  They will pay the same amount of Social Security taxes. 
B)  Ben will pay less Social Security taxes because he is married. 
C)  Ben will pay less Social Security taxes because he has children. 
D)  Jack will pay less Social Security taxes because he is single. 
E)  Jack will pay less Social Security taxes because he is over the age of 65. 
A)  They will pay the same amount of Social Security taxes. 
B)  Ben will pay less Social Security taxes because he is married. 
C)  Ben will pay less Social Security taxes because he has children. 
D)  Jack will pay less Social Security taxes because he is single. 
E)  Jack will pay less Social Security taxes because he is over the age of 65.

Question 5

Tax avoidance is legal, whereas tax evasion is illegal.

Accepted Answer

A) True 
 B)False

Question 6

The highest marginal tax rate is currently:

Accepted Answer

A)  32%. 
B)  35 %. 
C)  37 %. 
D)  41 %. 
E)  45%. 
A)  32%. 
B)  35 %. 
C)  37 %. 
D)  41 %. 
E)  45%.

Question 7

Based on the given information, what is Max's portfolio income?  
Interest from savings account  $1,000
Capital gains realized  5,000
Salary  8,000

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 8

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

Accepted Answer

Steve's Gross Income

Question 9

A taxpayer can file for an automatic extension of _____ months.

Accepted Answer

A)  2 
B)  4 
C)  6 
D)  9 
E)  12 
A)  2 
B)  4 
C)  6 
D)  9 
E)  12

Question 10

Schedule E of Form 1040:

Accepted Answer

A)  reports the amount of tax-exempt income an individual has. 
B)  reports any income from rental property. 
C)  reports common expenses that businesses and farms incur. 
D)  reports the gains or losses from the sale of capital assets. 
E)  lists the sources of interest income and dividend income. 
A)  reports the amount of tax-exempt income an individual has. 
B)  reports any income from rental property. 
C)  reports common expenses that businesses and farms incur. 
D)  reports the gains or losses from the sale of capital assets. 
E)  lists the sources of interest income and dividend income.

Question 11

INSTRUCTIONS: 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. 
[ Itemized deductions | Exemptions ] allow taxpayers to reduce their adjusted gross income (AGI) by the amount of their personal expenditures.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 12

Mr. and Mrs. Davenport, ages 40 and 38, respectively, have three children, ages 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:

Accepted Answer

A)  $0. 
B)  $1,875. 
C)  $3,500. 
D)  $2,750. 
E)  $4,500. 
A)  $0. 
B)  $1,875. 
C)  $3,500. 
D)  $2,750. 
E)  $4,500.

Question 13

A capital gain is the result of:

Accepted Answer

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

Question 14

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?

Accepted Answer

A)  Married filing separately 
B)  Married filing jointly 
C)  Head of household 
D)  Single 
E)  Qualifying widow or widower with dependent child 
A)  Married filing separately 
B)  Married filing jointly 
C)  Head of household 
D)  Single 
E)  Qualifying widow or widower with dependent child

Question 15

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

Question 16

Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gain from the sale was $40,000. Melinda's tax liability on the gain is:

Accepted Answer

A)  $10,500. 
B)  $8,400. 
C)  $6,000. 
D)  $4,500. 
E)  $1,500. 
A)  $10,500. 
B)  $8,400. 
C)  $6,000. 
D)  $4,500. 
E)  $1,500.

Question 17

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

Accepted Answer

A)  Not reporting the taxable income you receive 
B)  Investing in a tax-deferred annuity 
C)  Shifting income to your children 
D)  Investing money in municipal bonds 
E)  Putting money in a Roth individual retirement account (IR
A)  
A)  Not reporting the taxable income you receive 
B)  Investing in a tax-deferred annuity 
C)  Shifting income to your children 
D)  Investing money in municipal bonds 
E)  Putting money in a Roth individual retirement account (IR
A)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

You would typically include _____ in your gross income.

Accepted Answer

A)  child-support payments 
B)  life insurance death benefit payments 
C)  municipal bond interest 
D)  income from pensions 
E)  personal exemptions 
A)  child-support payments 
B)  life insurance death benefit payments 
C)  municipal bond interest 
D)  income from pensions 
E)  personal exemptions

Question 20

Shawn earns $65,000. If the total Social Security tax rate is 15.3%, how much is his Social Security tax? How much does his employer pay toward Social Security taxes for Shawn? (Show all work and round to the nearest dollar.)

Accepted Answer

Shawn's Social Security Tax =

The Internal Revenue Service (IRS) will compute taxes for those whose taxable income is less than $100,000 and who do not itemize deductions.

Which of the following determines the amount of income subject to federal income taxes?

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 statements regarding the amount of Social Security taxes they will have to pay is true?

Tax avoidance is legal, whereas tax evasion is illegal.

The highest marginal tax rate is currently:

Based on the given information, what is Max's portfolio income? Interest from savings account $1,000 Capital gains realized 5,000 Salary 8,000

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

A taxpayer can file for an automatic extension of _____ months.

Schedule E of Form 1040:

Mr. and Mrs. Davenport, ages 40 and 38, respectively, have three children, ages 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:

A capital gain is the result of:

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?

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

Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gain from the sale was $40,000. Melinda's tax liability on the gain is:

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

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

You would typically include _____ in your gross income.

Shawn earns $65,000. If the total Social Security tax rate is 15.3%, how much is his Social Security tax? How much does his employer pay toward Social Security taxes for Shawn? (Show all work and round to the nearest dollar.)

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

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 and Real Estate

Planning for Retirement

Preserving Your Estate

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Exam 3: Preparing Your Taxes

The Internal Revenue Service (IRS) will compute taxes for those whose taxable income is less than $100,000 and who do not itemize deductions.

Which of the following determines the amount of income subject to federal income taxes?

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 statements regarding the amount of Social Security taxes they will have to pay is true?

Tax avoidance is legal, whereas tax evasion is illegal.

The highest marginal tax rate is currently:

Based on the given information, what is Max's portfolio income? Interest from savings account $1,000 Capital gains realized 5,000 Salary 8,000

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

A taxpayer can file for an automatic extension of _____ months.

Schedule E of Form 1040:

Mr. and Mrs. Davenport, ages 40 and 38, respectively, have three children, ages 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:

A capital gain is the result of:

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?

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

Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gain from the sale was $40,000. Melinda's tax liability on the gain is:

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

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

You would typically include _____ in your gross income.

Shawn earns $65,000. If the total Social Security tax rate is 15.3%, how much is his Social Security tax? How much does his employer pay toward Social Security taxes for Shawn? (Show all work and round to the nearest dollar.)

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters