Question 1

If you are an unmarried taxpayer, with at least one child or dependent living with you, your filing status should be

Accepted Answer

A)  single 
B)  surviving spouse 
C)  married filing separately 
D)  head of household 
E)  none of the above 
A)  single 
B)  surviving spouse 
C)  married filing separately 
D)  head of household 
E)  none of the above

Question 2

Shawan is a single person with no dependents. She normally receives over $1800 every year for an income tax refund. She is having difficulty paying her monthly bills every month. What tax advice would you give her?

Accepted Answer

A)  She should increase her exemptions on her W-4 form at work. 
B)  She should pay her estimated taxes every quarter. 
C)  She needs to find some more tax deductions. 
D)  She needs to file as Head of Household status 
A)  She should increase her exemptions on her W-4 form at work. 
B)  She should pay her estimated taxes every quarter. 
C)  She needs to find some more tax deductions. 
D)  She needs to file as Head of Household status

Question 3

Tax credits reduce your adjusted gross income dollar-for-dollar. To compute the tax savings multiply the tax credit by the marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 4

Why might someone choose to use itemized deductions instead of taking the standard deduction offered by the IRS?

Accepted Answer

A)  It is easier to calculate your itemized deductions versus the standard deduction. 
B)  You may have a lower tax liability if you itemize instead of using the standard deduction. 
C)  Married taxpayers must use the itemized deductions only. 
D)  Most Computer Tax software automatically itemizes deductions. 
E)  both B and C are correct 
A)  It is easier to calculate your itemized deductions versus the standard deduction. 
B)  You may have a lower tax liability if you itemize instead of using the standard deduction. 
C)  Married taxpayers must use the itemized deductions only. 
D)  Most Computer Tax software automatically itemizes deductions. 
E)  both B and C are correct

Question 5

A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.

Accepted Answer

A) True 
 B)False

Question 6

Understanding how tax planning affects your personal finances is actually important for most taxpayers, not just the wealthy, because

Accepted Answer

A)  many people don't take advantage of all the deductions and tax credits they are entitled to. 
B)  many people pay higher taxes or receive smaller refunds than they need to. 
C)  the average American spends close to one-third of the year earning the money necessary to pay his or her taxes. 
D)  Only choices A and B 
E)  All of the above choices 
A)  many people don't take advantage of all the deductions and tax credits they are entitled to. 
B)  many people pay higher taxes or receive smaller refunds than they need to. 
C)  the average American spends close to one-third of the year earning the money necessary to pay his or her taxes. 
D)  Only choices A and B 
E)  All of the above choices

Question 7

Huong currently makes $30,000 per year and is in a 20% tax bracket. If he contributes $1,800 to his 401K plan at work, by how much will this lower his tax liability?

Accepted Answer

A)  $1,800 
B)  $6,000 
C)  $360 
D)  not enough information to determine the answer 
A)  $1,800 
B)  $6,000 
C)  $360 
D)  not enough information to determine the answer

Question 8

Which of the following statements about portfolio income from investments that are not held in a tax-deferred account, is accurate?

Accepted Answer

A)  It is also called investment income. 
B)  It is normally in the form of dividends and interest. 
C)  It must be reported on your tax return. 
D)  it may be taxed at a lower rate than wages and salaries are. 
E)  all of the above 
A)  It is also called investment income. 
B)  It is normally in the form of dividends and interest. 
C)  It must be reported on your tax return. 
D)  it may be taxed at a lower rate than wages and salaries are. 
E)  all of the above

Question 9

Dang Nguyen currently makes $30,000 per year and is in a 25% tax bracket. If he contributes $2,400 to his 401K plan at work, by how much will this lower his taxable income?

Accepted Answer

A)  $7,500 
B)  $600 
C)  $2,400 
D)  not enough information to determine the answer 
A)  $7,500 
B)  $600 
C)  $2,400 
D)  not enough information to determine the answer

Question 10

If you made a mistake, an amended tax return may be filed on Form ________.

Accepted Answer

A)  1040 
B)  1040A 
C)  1040X 
D)  1040ZX 
E)  1040EZ 
A)  1040 
B)  1040A 
C)  1040X 
D)  1040ZX 
E)  1040EZ

Question 11

Which of the following is a source of tax-free income?

Accepted Answer

A)  welfare benefits 
B)  earnings on your IRA 
C)  federal income tax refunds 
D)  child support payments 
E)  all of the above 
A)  welfare benefits 
B)  earnings on your IRA 
C)  federal income tax refunds 
D)  child support payments 
E)  all of the above

Question 12

A progressive tax rate is one that decreases as you make more income.

Accepted Answer

A) True 
 B)False

Question 13

In 2011 you purchased $1500 of IBM stock and you sold it this year for $1200. Since you lost money on this transaction, there is no valid reason to include this on this year's tax return.

Accepted Answer

A) True 
 B)False

Question 14

Income on which the payment of taxes is postponed until some future date is called ________.

Accepted Answer

A)  tax-delayed 
B)  tax-deferred 
C)  tax-postponed 
D)  tax-tardy 
E)  none of the above 
A)  tax-delayed 
B)  tax-deferred 
C)  tax-postponed 
D)  tax-tardy 
E)  none of the above

Question 15

Explain how to calculate your taxable income, and how to determine the need for a tax payment or refund.

Accepted Answer

First, calculate total gross income by a

Question 16

Assume that you have a marginal tax rate of 28 percent, a state income tax rate of 4 percent, and have a city income tax rate of 1 percent. The tax for Social Security and Medicare is 7.65 percent. What would be the effective marginal tax rate on your last dollar of earnings?

Accepted Answer

A)  28 percent 
B)  32 percent 
C)  33 percent 
D)  40.65 percent 
E)  cannot determine from the information provided. 
A)  28 percent 
B)  32 percent 
C)  33 percent 
D)  40.65 percent 
E)  cannot determine from the information provided.

Question 17

Suppose that you are not able to complete your tax returns by April 15. Which of the following statements is most accurate?

Accepted Answer

A)  You must provide adequate need in tax court, requesting extension of the deadline. 
B)  You can apply for an automatic extension - no questions asked, but you must enclose a check in payment for estimated taxes due. 
C)  You may have an extension, and the taxes are not due until the extension expires. 
D)  You do not have to pay interest on any taxes due on April 15, provided that you have filed for and have an approved extension prior to April 1 of the tax year. 
E)  None of the above statements are true. 
A)  You must provide adequate need in tax court, requesting extension of the deadline. 
B)  You can apply for an automatic extension - no questions asked, but you must enclose a check in payment for estimated taxes due. 
C)  You may have an extension, and the taxes are not due until the extension expires. 
D)  You do not have to pay interest on any taxes due on April 15, provided that you have filed for and have an approved extension prior to April 1 of the tax year. 
E)  None of the above statements are true.

Question 18

What combination of deductions and exemptions can the typical full-time college student who is employed during the summer, or perhaps during the school year, claim? Why?

Accepted Answer

The typical employed full-time college s

Question 19

Explain the concept of using the standard deduction or using itemized deductions.

Accepted Answer

The alternative to itemizing deductions

Question 20

FICA deductions from your paycheck are for which mandatory federal insurance programs?

Accepted Answer

A)  unemployment benefits 
B)  Social Security 
C)  Medicare 
D)  Medicaid 
E)  both B and C 
A)  unemployment benefits 
B)  Social Security 
C)  Medicare 
D)  Medicaid 
E)  both B and C

If you are an unmarried taxpayer, with at least one child or dependent living with you, your filing status should be

Shawan is a single person with no dependents. She normally receives over $1800 every year for an income tax refund. She is having difficulty paying her monthly bills every month. What tax advice would you give her?

Tax credits reduce your adjusted gross income dollar-for-dollar. To compute the tax savings multiply the tax credit by the marginal tax rate.

Why might someone choose to use itemized deductions instead of taking the standard deduction offered by the IRS?

A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.

Understanding how tax planning affects your personal finances is actually important for most taxpayers, not just the wealthy, because

Huong currently makes $30,000 per year and is in a 20% tax bracket. If he contributes $1,800 to his 401K plan at work, by how much will this lower his tax liability?

Which of the following statements about portfolio income from investments that are not held in a tax-deferred account, is accurate?

Dang Nguyen currently makes $30,000 per year and is in a 25% tax bracket. If he contributes $2,400 to his 401K plan at work, by how much will this lower his taxable income?

If you made a mistake, an amended tax return may be filed on Form ________.

Which of the following is a source of tax-free income?

A progressive tax rate is one that decreases as you make more income.

In 2011 you purchased $1500 of IBM stock and you sold it this year for $1200. Since you lost money on this transaction, there is no valid reason to include this on this year's tax return.

Income on which the payment of taxes is postponed until some future date is called ________.

Explain how to calculate your taxable income, and how to determine the need for a tax payment or refund.

Assume that you have a marginal tax rate of 28 percent, a state income tax rate of 4 percent, and have a city income tax rate of 1 percent. The tax for Social Security and Medicare is 7.65 percent. What would be the effective marginal tax rate on your last dollar of earnings?

Suppose that you are not able to complete your tax returns by April 15. Which of the following statements is most accurate?

What combination of deductions and exemptions can the typical full-time college student who is employed during the summer, or perhaps during the school year, claim? Why?

Explain the concept of using the standard deduction or using itemized deductions.

FICA deductions from your paycheck are for which mandatory federal insurance programs?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 4: Tax Planning and Strategies

If you are an unmarried taxpayer, with at least one child or dependent living with you, your filing status should be

Shawan is a single person with no dependents. She normally receives over $1800 every year for an income tax refund. She is having difficulty paying her monthly bills every month. What tax advice would you give her?

Tax credits reduce your adjusted gross income dollar-for-dollar. To compute the tax savings multiply the tax credit by the marginal tax rate.

Why might someone choose to use itemized deductions instead of taking the standard deduction offered by the IRS?

A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.

Understanding how tax planning affects your personal finances is actually important for most taxpayers, not just the wealthy, because

Huong currently makes $30,000 per year and is in a 20% tax bracket. If he contributes $1,800 to his 401K plan at work, by how much will this lower his tax liability?

Which of the following statements about portfolio income from investments that are not held in a tax-deferred account, is accurate?

Dang Nguyen currently makes $30,000 per year and is in a 25% tax bracket. If he contributes $2,400 to his 401K plan at work, by how much will this lower his taxable income?

If you made a mistake, an amended tax return may be filed on Form ________.

Which of the following is a source of tax-free income?

A progressive tax rate is one that decreases as you make more income.

In 2011 you purchased $1500 of IBM stock and you sold it this year for $1200. Since you lost money on this transaction, there is no valid reason to include this on this year's tax return.

Income on which the payment of taxes is postponed until some future date is called ________.

Explain how to calculate your taxable income, and how to determine the need for a tax payment or refund.

Assume that you have a marginal tax rate of 28 percent, a state income tax rate of 4 percent, and have a city income tax rate of 1 percent. The tax for Social Security and Medicare is 7.65 percent. What would be the effective marginal tax rate on your last dollar of earnings?

Suppose that you are not able to complete your tax returns by April 15. Which of the following statements is most accurate?

What combination of deductions and exemptions can the typical full-time college student who is employed during the summer, or perhaps during the school year, claim? Why?

Explain the concept of using the standard deduction or using itemized deductions.

FICA deductions from your paycheck are for which mandatory federal insurance programs?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters