Question 1

A way to defer income taxes to later years is to

Accepted Answer

A) contribute to individual retirement accounts. 
B) defer income to a later year. 
C) contribute to defined-contribution retirement plans. 
D) (all of these) 
A) contribute to individual retirement accounts. 
B) defer income to a later year. 
C) contribute to defined-contribution retirement plans. 
D) (all of these)

Question 2

Which of the following taxes is progressive?

Accepted Answer

A) Federal income taxes 
B) State sales taxes 
C) Social Security taxes 
D) All of these 
A) Federal income taxes 
B) State sales taxes 
C) Social Security taxes 
D) All of these

Question 3

Which of the following is most valuable to a taxpayer for the tax savings it provides?

Accepted Answer

A) $200 charitable contribution 
B) $200 dependent care credit 
C) $200 unreimbursed medical expense 
D) $200 employee business expense 
A) $200 charitable contribution 
B) $200 dependent care credit 
C) $200 unreimbursed medical expense 
D) $200 employee business expense

Question 4

Typically,a tax shelter defers taxes until a later date rather than avoiding taxes forever.

Accepted Answer

A) True 
 B)False

Question 5

Gross income is defined as all income received in the form of money.

Accepted Answer

A) True 
 B)False

Question 6

Short-term capital gains and long-term capital gains are taxed at the same rate.

Accepted Answer

A) True 
 B)False

Question 7

Joe and Marcia,a married couple with three young children,have a gross income of $120,000,adjustments of $6,700,and itemized deductions totaling $16,900.If personal exemptions for the year are $3,700 each and the standard deduction is $11,600 for married couples,what is Joe and Maria's taxable income if they file jointly?

Accepted Answer

A) $66,300 
B) $77,900 
C) $81,600 
D) $83,400 
A) $66,300 
B) $77,900 
C) $81,600 
D) $83,400

Question 8

Total itemized deductions must be ____ to reduce your tax liability.

Accepted Answer

A) greater than your standard deduction 
B) greater than 7.5 percent of your adjusted gross income 
C) greater than 5 percent of your adjusted gross income 
D) less than your taxable income 
A) greater than your standard deduction 
B) greater than 7.5 percent of your adjusted gross income 
C) greater than 5 percent of your adjusted gross income 
D) less than your taxable income

Question 9

Form 1040-X is used to obtain a refund when overpaid insurance because of a tax filing mistake from earlier years.

Accepted Answer

A) True 
 B)False

Question 10

Seeking legal ways to reduce,eliminate or defer income taxes is called

Accepted Answer

A) tax planning. 
B) financial planning. 
C) income maximization. 
D) asset allocation. 
A) tax planning. 
B) financial planning. 
C) income maximization. 
D) asset allocation.

Question 11

Kerri and Jason Smith have an adjusted gross income of $55,000.During the year they incurred unreimbursed expenses of $500 on prescription drugs,$2,506 on doctor and dentist bills,$1,200 on health insurance premiums,and $150 on medical related transportation costs.Assuming they have enough total itemized deductions to itemize,how much will they be allowed to deduct for these unreimbursed medical expenses?

Accepted Answer

A) $0 
B) $3,156 
C) $3,856 
D) $4,356 
A) $0 
B) $3,156 
C) $3,856 
D) $4,356

Question 12

Many high-income taxpayers must pay a higher alternative minimum tax rather than the tax they owe after taking allowable adjustments and deductions.

Accepted Answer

A) True 
 B)False

Question 13

Having your employer withhold more in estimated taxes than the likely tax liability ultimately due the government is a recommended technique for saving money.

Accepted Answer

A) True 
 B)False

Question 14

A tax that requires a higher-income person to pay a higher percentage of his or her income in taxes is called a ____ tax.

Accepted Answer

A) progressive 
B) regressive 
C) proportional 
D) marginal 
A) progressive 
B) regressive 
C) proportional 
D) marginal

Question 15

Depending on their level of income,low- and moderate-income taxpayers can claim a maximum nonrefundable ____ retirement savings contribution credit.

Accepted Answer

A) $500 
B) $1,000 
C) $3,650 
D) 15 percent 
A) $500 
B) $1,000 
C) $3,650 
D) 15 percent

Question 16

Union or professional dues do not qualify as a miscellaneous itemized deduction.

Accepted Answer

A) True 
 B)False

Question 17

Sally McKrachen is a single young professional with a gross income of $51,000.Sally has no adjustments to gross income,but she does have itemized deductions totaling $4,275.If personal exemptions for the year are $3,700 each and the standard deduction is $5,800,what is Sally's taxable income?

Accepted Answer

A) $37,225 
B) $41,500 
C) $43,025 
D) $47,300 
A) $37,225 
B) $41,500 
C) $43,025 
D) $47,300

Question 18

A state income tax refund is reported as taxable income only if the taxpayer itemized deductions the previous year.

Accepted Answer

A) True 
 B)False

Question 19

Certain real estate losses are deductible against ordinary taxable income up to a limit of $25,000 when the

Accepted Answer

A) investment is in a limited partnership. 
B) taxpayer has an adjusted gross income of $150,000 or less. 
C) taxpayer actively participates in the management of the investment. 
D) taxpayer has an adjusted gross income of $150,000 or less and the taxpayer actively participates in the management of the property. 
A) investment is in a limited partnership. 
B) taxpayer has an adjusted gross income of $150,000 or less. 
C) taxpayer actively participates in the management of the investment. 
D) taxpayer has an adjusted gross income of $150,000 or less and the taxpayer actively participates in the management of the property.

Question 20

A person's average tax rate is always lower than his or her marginal tax rate.

Accepted Answer

A) True 
 B)False

A way to defer income taxes to later years is to

Which of the following taxes is progressive?

Which of the following is most valuable to a taxpayer for the tax savings it provides?

Typically,a tax shelter defers taxes until a later date rather than avoiding taxes forever.

Gross income is defined as all income received in the form of money.

Short-term capital gains and long-term capital gains are taxed at the same rate.

Total itemized deductions must be ____ to reduce your tax liability.

Form 1040-X is used to obtain a refund when overpaid insurance because of a tax filing mistake from earlier years.

Seeking legal ways to reduce,eliminate or defer income taxes is called

Many high-income taxpayers must pay a higher alternative minimum tax rather than the tax they owe after taking allowable adjustments and deductions.

Having your employer withhold more in estimated taxes than the likely tax liability ultimately due the government is a recommended technique for saving money.

A tax that requires a higher-income person to pay a higher percentage of his or her income in taxes is called a ____ tax.

Depending on their level of income,low- and moderate-income taxpayers can claim a maximum nonrefundable ____ retirement savings contribution credit.

Union or professional dues do not qualify as a miscellaneous itemized deduction.

Sally McKrachen is a single young professional with a gross income of $51,000.Sally has no adjustments to gross income,but she does have itemized deductions totaling $4,275.If personal exemptions for the year are $3,700 each and the standard deduction is $5,800,what is Sally's taxable income?

A state income tax refund is reported as taxable income only if the taxpayer itemized deductions the previous year.

Certain real estate losses are deductible against ordinary taxable income up to a limit of $25,000 when the

A person's average tax rate is always lower than his or her marginal tax rate.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investment Fundamentals

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

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Exam 4: Managing Income Taxes

A way to defer income taxes to later years is to

Which of the following taxes is progressive?

Which of the following is most valuable to a taxpayer for the tax savings it provides?

Typically,a tax shelter defers taxes until a later date rather than avoiding taxes forever.

Gross income is defined as all income received in the form of money.

Short-term capital gains and long-term capital gains are taxed at the same rate.

Total itemized deductions must be ____ to reduce your tax liability.

Form 1040-X is used to obtain a refund when overpaid insurance because of a tax filing mistake from earlier years.

Seeking legal ways to reduce,eliminate or defer income taxes is called

Many high-income taxpayers must pay a higher alternative minimum tax rather than the tax they owe after taking allowable adjustments and deductions.

Having your employer withhold more in estimated taxes than the likely tax liability ultimately due the government is a recommended technique for saving money.

A tax that requires a higher-income person to pay a higher percentage of his or her income in taxes is called a ____ tax.

Depending on their level of income,low- and moderate-income taxpayers can claim a maximum nonrefundable ____ retirement savings contribution credit.

Union or professional dues do not qualify as a miscellaneous itemized deduction.

Sally McKrachen is a single young professional with a gross income of $51,000.Sally has no adjustments to gross income,but she does have itemized deductions totaling $4,275.If personal exemptions for the year are $3,700 each and the standard deduction is $5,800,what is Sally's taxable income?

A state income tax refund is reported as taxable income only if the taxpayer itemized deductions the previous year.

Certain real estate losses are deductible against ordinary taxable income up to a limit of $25,000 when the

A person's average tax rate is always lower than his or her marginal tax rate.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investment Fundamentals

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters