Exam 4: Tax Planning and Strategies

Bang Nguyen recently graduated from college and started working in a good job. He has a little money invested in a stock that pays no dividends. He lives in an apartment, is single, and has no dependents. He has a $22,000 student loan balance and he paid $600 interest in 2011. He is considering going back to school part-time for some additional computer classes. He does not have a personal IRA and he contributed 2% of his $38,750 salary to his 401K plan at work for 2011. He is just completing his tax return for 2011. Based on the information below, answer the following questions. -What will Bang's total tax liability be for 2011?

You purchased 100 shares of I-Tech stock for $40 per share 3 years ago. If you sold those shares today at the current market price of $150 per share, what would be your capital gain on the sale, ignoring all commissions?

In 2005 you purchased a stamp collection for $75 and you sold it this year for $150. Legally, you don't need to pay any taxes on this transaction.

The Lifetime Learning tax credit is designed to help all taxpayers get at least a two-year degree.

Only people in the higher tax brackets pay taxes on capital gains.

The movement into a higher tax bracket as a result of inflation increasing wages is called ________.

The amount of income taxes that you actually pay is based upon your

Wilma Rudolph was given a cost of living raise and a merit raise at work this year. Her federal income taxes will be paid at 25% instead of 15%. Wilma has experienced

If you are in a 25 percent tax bracket then every dollar of your adjusted gross income will be taxed at 25 percent.

When considering a principal residence as a tax shelter, remember that you can

You and your spouse have earned salary and wages of $41,750. In addition you have municipal bond interest income of $600 and savings account and certificate of deposit interest income of $800. You paid a total of $600 in interest on your student loan. Using only this information, what is your total income for tax purposes?

Name and describe the four general categories that reduce your taxable income, therefore reducing your tax liability.

Six schedules are commonly used by taxpayers filing Form 1040. Give the title of each of these six basic schedules: A, B, C, D, E, EIC.

Income that comes from wages or a business is called ________.

Which of the following is a reason or reasons for the IRS to audit your tax return?

Contributing $2,000 into a tax-deferred retirement plan in a 28% tax bracket will save

Bang Nguyen recently graduated from college and started working in a good job. He has a little money invested in a stock that pays no dividends. He lives in an apartment, is single, and has no dependents. He has a $22,000 student loan balance and he paid $600 interest in 2011. He is considering going back to school part-time for some additional computer classes. He does not have a personal IRA and he contributed 2% of his $38,750 salary to his 401K plan at work for 2011. He is just completing his tax return for 2011. Based on the information below, answer the following questions. -What is Bang's gross income for 2011?

Janet and her husband, Bob, are facing a totally new income tax situation this year. She is a corporate accountant and Bob is an engineer. Their gross salaries total $89,000. Janet and Bob graduated from four-year universities six years ago and are still paying off large college loans. She is attending school part-time now to prepare for the CPA exam. The Emmersons incurred considerable expenses in the process of adopting an infant this year, and also have the ongoing expense of daycare. In January of last year they closed on their new home. Although trained as an accountant, Janet's work has not involved income tax preparation. Help them consider the following questions. -The Emmersons

________ income is from activities in which the taxpayer does not actively participate.

From the list below choose the item that is not a permissible tax deduction.