Exam 4: Tax Planning and Strategies

Samuel Ahn recently graduated from college and started working in a promising career field. 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 $800 interest in 2014. 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 percent of his $39,500 salary to his employer's 401(k) plan in 2014. As he completes his tax return for 2014, use the information above and below to help him answer the following questions. Standard deduction for 2014: $6,200 Personal exemption for 2014: $3,950 Tax brackets for 2014: Taxable income range Tax rate Up to $9,075 10 percent More than $9,075 but under $36,900 15 percent More than $36,900 but under $89,350 25 percent -What is Samuel's total tax liability for 2014?

You wish to make a charitable contribution of $2,000 to a qualified organization.You are currently in the 28 percent marginal tax bracket.By how much would this contribution lower your tax bill assuming your other itemized deductions exceed the standard deduction?

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

Which of the following would offset your tax liability in a direct dollar for dollar manner and may actually increase your tax refund beyond the amount paid during the tax year?

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

Deductions calculated using the federal tax form "Schedule A" which are totaled and then subtracted from taxable income are called

Social Security is a voluntary insurance program administered by the federal government that provides for you and your family in the event of death,disability,health problems,or retirement.

If you're in the 15% marginal tax bracket,what is the equivalent taxable yield on an 8% municipal bond?

Free File is configured in a way that allows ________ of U.S.taxpayers who are eligible to use it.

Ashlyn is a single person with no dependents.She normally receives over $1,800 every year for an income tax refund.She is having difficulty paying her monthly bills every month.What tax advice would you give her?

What are two tax advantages of tax-deferred retirement plans?

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

Which of the following are permissible itemized tax deductions?

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

Katarina and Richard are a busy young couple with a son, Caleb, who is 6 and twin daughters, Stacy and Casey, who are actively exploring the world as four-year-olds. Before the twins were born, Katarina and Richard bought their first home with plenty of indoor and outdoor space for a growing young family. The Bajorshiks are concerned about their 2014 tax issues, but they are also committed to planning for the future of their family. Next year Richard should be able to pay off the remaining balance of his law school student loans. Contributing to Richard's Roth IRA is an annual priority. The following information reflects tax year 2014. Gross income $98,712 Student loan interest $1,965 Richard's traditional IRA $1,500 Total itemized deductions $12,000 Standard deduction for 2014 $12,400 Personal exemption amount $3,950 Marginal tax bracket 25% -Although Richard and Katarina are a happily married couple,they joke that they could not possibly remarry for at least two years following the year of the death of the other spouse because

Explain the ways income taxes are paid or collected.

For many years Joseph paid someone else to file his income tax return. After taking a personal finance course at his local college, Joseph feels he is ready to tackle it on his own for tax year 2014. Joseph is single with an income of $43,000 and has no dependents. He has little interest income from savings, does not have a personal IRA, and plans to itemize deductions. Joseph owns a home and travels a lot with his job. He pays some of his own work-related expenses because his employer does not pay for all of them. His only personal investments include 1,500 shares of stock he inherited from his uncle, which he does not intend to sell for many years because the blue-chip company has a strong history of dividend income and share price appreciation. However, he does contribute monthly to his 401(k) plan at work. -Joseph can qualify for all of the following except the

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

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.

The health care premium credit is available to low-income taxpayers who purchased coverage through the Health Insurance Marketplace.