Question 1

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

Accepted Answer

A)  State, local, and real estate taxes 
B)  Home equity loan interest on debt up to $100,000 
C)  Auto, truck, or van loan interest 
D)  Interest on money borrowed to invest, within the IRS limits based on investment income 
E)  Unreimbursed job-related expenses and tax preparation costs within the IRS limits 
A)  State, local, and real estate taxes 
B)  Home equity loan interest on debt up to $100,000 
C)  Auto, truck, or van loan interest 
D)  Interest on money borrowed to invest, within the IRS limits based on investment income 
E)  Unreimbursed job-related expenses and tax preparation costs within the IRS limits

Question 2

Which factors affect your choice between claiming itemized deductions and the standard deduction?

Accepted Answer

A)  Home ownership, as mortgage interest may exceed the standard deduction 
B)  More deductible expenses this year than last year, as a result of unforeseen circumstances or planned "bunching" of deductions 
C)  Ease and simplicity of filing 
D)  Year long recordkeeping to thoroughly and accurately document itemized deductions 
E)  All of the above 
A)  Home ownership, as mortgage interest may exceed the standard deduction 
B)  More deductible expenses this year than last year, as a result of unforeseen circumstances or planned "bunching" of deductions 
C)  Ease and simplicity of filing 
D)  Year long recordkeeping to thoroughly and accurately document itemized deductions 
E)  All of the above

Question 3

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
-Based on Samuel's completed tax return,what advice would you give him to lower his tax liability for 2015?

Accepted Answer

A)  He should take the computer classes in 2015. 
B)  He should sell his stock. 
C)  He should increase his contributions to the 401(k) plan at work. 
D)  He should get a roommate and claim him as a dependant. 
E)  Both A and C are good advice. 
A)  He should take the computer classes in 2015. 
B)  He should sell his stock. 
C)  He should increase his contributions to the 401(k) plan at work. 
D)  He should get a roommate and claim him as a dependant. 
E)  Both A and C are good advice.

Question 4

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 5

Why are the various tax "credits" such a welcome relief?

Accepted Answer

Tax credits are subtracted directly from

Question 6

According the Keown book,most taxes,about 30 percent of individual income taxes,are collected through withholding from wages.

Accepted Answer

A) True 
 B)False

Question 7

Your dependent is claimed as an approved exemption on ________ tax return.

Accepted Answer

A)  your 
B)  his or her own 
C)  the return they choose themselves 
D)  all of the above 
E)  none of the above 
A)  your 
B)  his or her own 
C)  the return they choose themselves 
D)  all of the above 
E)  none of the above

Question 8

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?

Accepted Answer

A)  $110 
B)  $3,667 
C)  $7,333 
D)  $11,000 
E)  None of the above 
A)  $110 
B)  $3,667 
C)  $7,333 
D)  $11,000 
E)  None of the above

Question 9

A source of tax-free income is

Accepted Answer

A)  interest on municipal bonds. 
B)  inheritances. 
C)  foreign income incurred by U.S. citizens living and working abroad. 
D)  All of the above are sources of tax-free income. 
A)  interest on municipal bonds. 
B)  inheritances. 
C)  foreign income incurred by U.S. citizens living and working abroad. 
D)  All of the above are sources of tax-free income.

Question 10

Which of the following is an advantage of filing electronically?

Accepted Answer

A)  Faster refunds 
B)  Quick electronic confirmation 
C)  More accurate returns 
D)  All of the above 
A)  Faster refunds 
B)  Quick electronic confirmation 
C)  More accurate returns 
D)  All of the above

Question 11

A key to calculating your taxes is deciding which Form 1050 to use: 1050EZ,1050A,or 1050.

Accepted Answer

A) True 
 B)False

Question 12

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%
-What is the Bajorshiks' adjusted gross income?

Accepted Answer

A)  $98,712 
B)  $97,212 
C)  $96,747 
D)  $95,247 
E)  $83,462 
A)  $98,712 
B)  $97,212 
C)  $96,747 
D)  $95,247 
E)  $83,462

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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%
-If the Bajorshiks' income does not exceed the phase-out level of $110,000 in 2014,by how much will the child tax credit reduce their tax liability?

Accepted Answer

A)  Their tax liability will be reduced by $750. 
B)  Their tax liability will be reduced by $2,000. 
C)  Their tax liability will be reduced by $2,100. 
D)  Their tax liability will be reduced by $3,000. 
A)  Their tax liability will be reduced by $750. 
B)  Their tax liability will be reduced by $2,000. 
C)  Their tax liability will be reduced by $2,100. 
D)  Their tax liability will be reduced by $3,000.

Question 15

Which of the following is not allowed as a personal or dependency exemption?

Accepted Answer

A)  Yourself 
B)  Your 26-year-old child, who lives at home and earns $27,000 a year 
C)  Your spouse, if you're filing a joint return 
D)  Your 75-year-old grandfather, whom you financially support 
A)  Yourself 
B)  Your 26-year-old child, who lives at home and earns $27,000 a year 
C)  Your spouse, if you're filing a joint return 
D)  Your 75-year-old grandfather, whom you financially support

Question 16

Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)  You were randomly selected as a matter of routine audits. 
B)  You were audited in the past. 
C)  There is something suspicious on your return. 
D)  You earn a lot of money. 
E)  any or all of the above 
A)  You were randomly selected as a matter of routine audits. 
B)  You were audited in the past. 
C)  There is something suspicious on your return. 
D)  You earn a lot of money. 
E)  any or all of the above

Question 18

Three years ago you purchased a share of CompUTech stock for $32,which you could sell today at the current market price of $252.What would be your capital gain on the sale,ignoring commissions?

Accepted Answer

A)  $32 
B)  $220 
C)  $252 
D)  $284 
A)  $32 
B)  $220 
C)  $252 
D)  $284

Question 19

You pay taxes only when you sell stock and realize the gain.

Accepted Answer

A) True 
 B)False

Question 20

Which of the statements about audits is false?

Accepted Answer

A)  1 percent of individual taxpayers are audited. 
B)  23.57 percent of individuals earning between $500,000 and $1 million are audited. 
C)  8.9 percent of individuals earning between $1 million and $5 million are audited. 
D)  27.37 percent of individuals earning more than $10 million are audited. 
A)  1 percent of individual taxpayers are audited. 
B)  23.57 percent of individuals earning between $500,000 and $1 million are audited. 
C)  8.9 percent of individuals earning between $1 million and $5 million are audited. 
D)  27.37 percent of individuals earning more than $10 million are audited.

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

Which factors affect your choice between claiming itemized deductions and the standard deduction?

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

Why are the various tax "credits" such a welcome relief?

According the Keown book,most taxes,about 30 percent of individual income taxes,are collected through withholding from wages.

Your dependent is claimed as an approved exemption on ________ tax return.

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?

A source of tax-free income is

Which of the following is an advantage of filing electronically?

A key to calculating your taxes is deciding which Form 1050 to use: 1050EZ,1050A,or 1050.

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

Which of the following is not allowed as a personal or dependency exemption?

Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.

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

Three years ago you purchased a share of CompUTech stock for $32,which you could sell today at the current market price of $252.What would be your capital gain on the sale,ignoring commissions?

You pay taxes only when you sell stock and realize the gain.

Which of the statements about audits is false?

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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

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

Which factors affect your choice between claiming itemized deductions and the standard deduction?

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

Why are the various tax "credits" such a welcome relief?

According the Keown book,most taxes,about 30 percent of individual income taxes,are collected through withholding from wages.

Your dependent is claimed as an approved exemption on ________ tax return.

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?

A source of tax-free income is

Which of the following is an advantage of filing electronically?

A key to calculating your taxes is deciding which Form 1050 to use: 1050EZ,1050A,or 1050.

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

Which of the following is not allowed as a personal or dependency exemption?

Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.

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

Three years ago you purchased a share of CompUTech stock for $32,which you could sell today at the current market price of $252.What would be your capital gain on the sale,ignoring commissions?

You pay taxes only when you sell stock and realize the gain.

Which of the statements about audits is false?

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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