Question 1

Which of the following statements regarding enrolled agents (EAs) 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 expenditures. 
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 expenditures. 
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

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

Accepted Answer

A)  $8,000. 
B)  $7,000. 
C)  $4,000. 
D)  $6,000. 
E)  $0. 
A)  $8,000. 
B)  $7,000. 
C)  $4,000. 
D)  $6,000. 
E)  $0.

Question 3

Mandi and Thomas were married and had a child, age 7, in 2018 . Mandi died in 2018, leaving Thomas a single parent. The most favorable filing status for Thomas in 2019 will be:

Accepted Answer

A)  single. 
B)  married filing separately. 
C)  head of household. 
D)  qualifying widower with dependent child. 
E)  married filing jointly. 
A)  single. 
B)  married filing separately. 
C)  head of household. 
D)  qualifying widower with dependent child. 
E)  married filing jointly.

Question 4

Jamil and Vicki have one child, age 3. How much will a tax credit reduce their tax liability?

Accepted Answer

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

Question 5

A tax audit is a(n):

Accepted Answer

A)  Internal Revenue Service (IRS) revision of a previously filed return. 
B)  Internal Revenue Service (IRS) attempt to verify the accuracy of a return. 
C)  Internal Revenue Service (IRS) charge of illegal action. 
D)  U.S. Tax Court action. 
E)  U.S. Tax Court decision. 
A)  Internal Revenue Service (IRS) revision of a previously filed return. 
B)  Internal Revenue Service (IRS) attempt to verify the accuracy of a return. 
C)  Internal Revenue Service (IRS) charge of illegal action. 
D)  U.S. Tax Court action. 
E)  U.S. Tax Court decision.

Question 6

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. 
If you pay a professional to prepare your taxes, any errors on the return will be [ your | the preparer's ] responsibility.

Accepted Answer

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

Question 7

Tax credits reduce your:

Accepted Answer

A)  tax liability. 
B)  adjusted gross income (AGI). 
C)  tax refund. 
D)  tax withholding. 
E)  taxable income. 
A)  tax liability. 
B)  adjusted gross income (AGI). 
C)  tax refund. 
D)  tax withholding. 
E)  taxable income.

Question 8

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 9

Tom sold mutual fund shares, which he had owned for 3 years, so that he could use the proceeds to return to college. Tom is in the 12% ordinary tax bracket, and his capital gain from the sale was $12,000. How much tax does Tom owe on the gain?

Accepted Answer

A)  $12,000 
B)  $3,080 
C)  $1,440 
D)  $1,200 
E)  $0 
A)  $12,000 
B)  $3,080 
C)  $1,440 
D)  $1,200 
E)  $0

Question 10

If you are legally separated from your spouse by a separation decree, you can legally file as a single taxpayer.

Accepted Answer

A) True 
 B)False

Question 11

Adjustments to (gross) income will decrease your taxable income.

Accepted Answer

A) True 
 B)False

Question 12

Molly and Justin are considering contributing to a qualified tax-exempt organization. Their adjusted gross income (AGI) is $100,000. What is the maximum amount they can claim as an itemized deduction under the Tax Cuts and Jobs Act of 2017?

Accepted Answer

A)  $0 
B)  $600 
C)  $1,200 
D)  $6,000 
E)  $60,000 
A)  $0 
B)  $600 
C)  $1,200 
D)  $6,000 
E)  $60,000

Question 13

Tax practitioners who are federally licensed are called:

Accepted Answer

A)  certified public accountants (CPAs). 
B)  certified financial planners (CFPs). 
C)  tax attorneys. 
D)  enrolled agents (EAs). 
E)  chartered financial analysts (CFAs). 
A)  certified public accountants (CPAs). 
B)  certified financial planners (CFPs). 
C)  tax attorneys. 
D)  enrolled agents (EAs). 
E)  chartered financial analysts (CFAs).

Question 14

Schedule _____ of Form 1040 reports capital gains and losses.

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  F 
A)  A 
B)  B 
C)  C 
D)  D 
E)  F

Question 15

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. 
The tax year corresponds to the [ April 15 filing deadline | calendar year ].

Accepted Answer

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

Question 16

Which of the following is subject to federal income tax?

Accepted Answer

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

Question 17

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:

Accepted Answer

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

Question 18

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. 
Tax [ avoidance | evasion ] focuses on reducing taxes in ways that are legal and compatible with the intent of Congress.

Accepted Answer

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

Question 19

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. 
Earnings from real estate investments are an example of [ active | passive ] income.

Accepted Answer

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

Question 20

The Robertsons, a couple with an adjusted gross income (AGI) of $28,500, decide 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?

Accepted Answer

A)  Tax deferral 
B)  Tax avoidance 
C)  Tax evasion 
D)  Tax ignorance 
E)  Income shifting 
A)  Tax deferral 
B)  Tax avoidance 
C)  Tax evasion 
D)  Tax ignorance 
E)  Income shifting

Which of the following statements regarding enrolled agents (EAs) is true?

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

Mandi and Thomas were married and had a child, age 7, in 2018 . Mandi died in 2018, leaving Thomas a single parent. The most favorable filing status for Thomas in 2019 will be:

Jamil and Vicki have one child, age 3. How much will a tax credit reduce their tax liability?

A tax audit is a(n):

Tax credits reduce your:

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

Tom sold mutual fund shares, which he had owned for 3 years, so that he could use the proceeds to return to college. Tom is in the 12% ordinary tax bracket, and his capital gain from the sale was $12,000. How much tax does Tom owe on the gain?

If you are legally separated from your spouse by a separation decree, you can legally file as a single taxpayer.

Adjustments to (gross) income will decrease your taxable income.

Molly and Justin are considering contributing to a qualified tax-exempt organization. Their adjusted gross income (AGI) is $100,000. What is the maximum amount they can claim as an itemized deduction under the Tax Cuts and Jobs Act of 2017?

Tax practitioners who are federally licensed are called:

Schedule _____ of Form 1040 reports capital gains and losses.

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. The tax year corresponds to the [ April 15 filing deadline | calendar year ].

Which of the following is subject to federal income tax?

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:

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. Earnings from real estate investments are an example of [ active | passive ] income.

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

Exam 3: Preparing Your Taxes

Which of the following statements regarding enrolled agents (EAs) is true?

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

Mandi and Thomas were married and had a child, age 7, in 2018 . Mandi died in 2018, leaving Thomas a single parent. The most favorable filing status for Thomas in 2019 will be:

Jamil and Vicki have one child, age 3. How much will a tax credit reduce their tax liability?

A tax audit is a(n):

Tax credits reduce your:

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

Tom sold mutual fund shares, which he had owned for 3 years, so that he could use the proceeds to return to college. Tom is in the 12% ordinary tax bracket, and his capital gain from the sale was $12,000. How much tax does Tom owe on the gain?

If you are legally separated from your spouse by a separation decree, you can legally file as a single taxpayer.

Adjustments to (gross) income will decrease your taxable income.

Molly and Justin are considering contributing to a qualified tax-exempt organization. Their adjusted gross income (AGI) is $100,000. What is the maximum amount they can claim as an itemized deduction under the Tax Cuts and Jobs Act of 2017?

Tax practitioners who are federally licensed are called:

Schedule _____ of Form 1040 reports capital gains and losses.

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. The tax year corresponds to the [ April 15 filing deadline | calendar year ].

Which of the following is subject to federal income tax?

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:

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. Earnings from real estate investments are an example of [ active | passive ] income.

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