Question 1

In 2019, 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 2

If you are a professional who is likely to receive income that is not subject to withholding, then you are required to:

Accepted Answer

A)  pay an estimated tax. 
B)  file an amended return. 
C)  file an extension. 
D)  deduct a tax credit. 
E)  calculate itemized deductions. 
A)  pay an estimated tax. 
B)  file an amended return. 
C)  file an extension. 
D)  deduct a tax credit. 
E)  calculate itemized deductions.

Question 3

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 4

Dwayne and Gayle were divorced on September 29. They have not remarried since and have no dependents. Their filing status for the year will be married filing separately since they were married for more than half of the year.

Accepted Answer

A) True 
 B)False

Question 5

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. 
Dividends received from stocks are known as [ passive | portfolio ] income.

Accepted Answer

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

Question 6

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 level of earnings 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 level of earnings 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 7

Gross income minus tax-exempt income equals adjusted gross income (AGI).

Accepted Answer

A) True 
 B)False

Question 8

A tax audit is an examination by local government officials to identify people who do not pay enough taxes.

Accepted Answer

A) True 
 B)False

Question 9

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 higher your income, the [ greater | smaller ] the probability you will be audited.

Accepted Answer

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

Question 10

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. 
Your income tax filing status is determined primarily by your [ economic  | family ] situation.

Accepted Answer

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

Question 11

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 adjusted gross income (AGI) based on the number of persons supported by the taxpayer's income. 
C)  They represent the income remaining after subtracting all allowable adjustments to (gross) income. 
D)  They are personal expenditures that can be deducted from adjusted gross income (AGI) when determining taxable income. 
E)  They are deductions from a taxpayer's tax liability that directly reduce his or her 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 adjusted gross income (AGI) based on the number of persons supported by the taxpayer's income. 
C)  They represent the income remaining after subtracting all allowable adjustments to (gross) income. 
D)  They are personal expenditures that can be deducted from adjusted gross income (AGI) when determining taxable income. 
E)  They are deductions from a taxpayer's tax liability that directly reduce his or her taxes due.

Question 12

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 13

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. 
A tax credit could result from [ owning a home | adopting a child ].

Accepted Answer

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

Question 14

Mark is not married and has dependent parents. He pays more than half of the cost of keeping up 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 with dependent child. 
A)  single taxpayer. 
B)  married filing jointly. 
C)  married filing separately. 
D)  head of household. 
E)  qualifying widow with dependent child.

Question 15

A _____ would most likely have to pay estimated taxes.

Accepted Answer

A)  school teacher 
B)  manager for an industrial firm 
C)  independent consultant 
D)  state police officer 
E)  corporate attorney 
A)  school teacher 
B)  manager for an industrial firm 
C)  independent consultant 
D)  state police officer 
E)  corporate attorney

Question 16

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. 
For tax years from 2018 through 2025, individuals are allowed a deduction of [ 20% | 25% ] of qualified business income.

Accepted Answer

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

Question 17

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 [planning | preparation] software will be most helpful for a taxpayer who itemizes deductions but doesn't need tax advice.

Accepted Answer

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

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. 
The lowest marginal tax rate is currently [10% | 15%].

Accepted Answer

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

Question 19

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:

Accepted Answer

A)  $400,000. 
B)  $300,000. 
C)  $250,000. 
D)  $150,000. 
E)  $0. 
A)  $400,000. 
B)  $300,000. 
C)  $250,000. 
D)  $150,000. 
E)  $0.

Question 20

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. 
A tax credit is subtracted from your [ taxable income | tax liability ].

Accepted Answer

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

In 2019, the total FICA tax rate was:

If you are a professional who is likely to receive income that is not subject to withholding, then you are required to:

Dwayne and Gayle were divorced on September 29. They have not remarried since and have no dependents. Their filing status for the year will be married filing separately since they were married for more than half of the year.

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. Dividends received from stocks are known as [ passive | portfolio ] income.

Your income tax withholding is dependent on:

Gross income minus tax-exempt income equals adjusted gross income (AGI).

A tax audit is an examination by local government officials to identify people who do not pay enough taxes.

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 higher your income, the [ greater | smaller ] the probability you will be audited.

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. Your income tax filing status is determined primarily by your [ economic | family ] situation.

Which of the following statements regarding tax credits is true?

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.

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. A tax credit could result from [ owning a home | adopting a child ].

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

A _____ would most likely have to pay estimated taxes.

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 lowest marginal tax rate is currently [10% | 15%].

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:

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. A tax credit is subtracted from your [ taxable income | tax liability ].

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

In 2019, the total FICA tax rate was:

If you are a professional who is likely to receive income that is not subject to withholding, then you are required to:

Dwayne and Gayle were divorced on September 29. They have not remarried since and have no dependents. Their filing status for the year will be married filing separately since they were married for more than half of the year.

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. Dividends received from stocks are known as [ passive | portfolio ] income.

Your income tax withholding is dependent on:

Gross income minus tax-exempt income equals adjusted gross income (AGI).

A tax audit is an examination by local government officials to identify people who do not pay enough taxes.

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 higher your income, the [ greater | smaller ] the probability you will be audited.

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. Your income tax filing status is determined primarily by your [ economic | family ] situation.

Which of the following statements regarding tax credits is true?

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.

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. A tax credit could result from [ owning a home | adopting a child ].

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

A _____ would most likely have to pay estimated taxes.

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 lowest marginal tax rate is currently [10% | 15%].

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:

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. A tax credit is subtracted from your [ taxable income | tax liability ].

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