Question 1

The tax break for losses from passive investments begins to phase out for taxpayers higher incomes.

Accepted Answer

A) True 
 B)False

Question 2

Tax deferral with a traditional IRA allows investment income to grow without being taxed until it is withdrawn.

Accepted Answer

A) True 
 B)False

Question 3

Your average tax rate

Accepted Answer

A) equals your marginal tax rate. 
B) is greater than your marginal tax rate. 
C) is less than your marginal tax rate. 
D) is none of these. 
A) equals your marginal tax rate. 
B) is greater than your marginal tax rate. 
C) is less than your marginal tax rate. 
D) is none of these.

Question 4

Taxes withheld for Social Security and Medicare are also known as

Accepted Answer

A) Social Security and Medicare taxes. 
B) FICA. 
C) the Federal Insurance Contributions Act. 
D) (all of these) 
A) Social Security and Medicare taxes. 
B) FICA. 
C) the Federal Insurance Contributions Act. 
D) (all of these)

Question 5

Which of the following is not a way of reducing taxable income?

Accepted Answer

A) Reducing deductions 
B) Deferring income 
C) Using tax-exempt income 
D) Investing in tax shelters 
A) Reducing deductions 
B) Deferring income 
C) Using tax-exempt income 
D) Investing in tax shelters

Question 6

The full market value of any lost property can be deducted as a casualty or theft loss when the loss results from a sudden,unexpected,or unusual event.

Accepted Answer

A) True 
 B)False

Question 7

If your tax is $3,728 on a taxable income of $27,825 and your tax is $3,743 on a taxable income of $27,925 you are in the 15 percent tax bracket.

Accepted Answer

A) True 
 B)False

Question 8

Mike has a chronic illness.He had an adjusted gross income of $42,000.During the year he incurred unreimbursed expenses of $2,500 on prescription drugs,$3,500 on doctor and dentist bills,$2,400 on health insurance premiums,and $250 on medical related transportation costs.Assuming he had enough total itemized deductions to itemize,how much will he be allowed to deduct for these unreimbursed medical expenses?

Accepted Answer

A) $0 
B) $2,050 
C) $4,450 
D) $8,650 
A) $0 
B) $2,050 
C) $4,450 
D) $8,650

Question 9

Which of the following is an example of earned income?

Accepted Answer

A) Welfare payments 
B) Interest 
C) Capital gains 
D) Self-employment income 
A) Welfare payments 
B) Interest 
C) Capital gains 
D) Self-employment income

Question 10

Which of the following would be considered smart financial planning?

Accepted Answer

A) Turn all your income tax planning over to someone else. 
B) Withhold too much income in order to receive a refund next year. 
C) Ignore the impact of income taxes in your personal financial planning. 
D) Contribute to your employer-sponsored 401(k) retirement plan at least up to the amount of the employer's matching contribution. 
A) Turn all your income tax planning over to someone else. 
B) Withhold too much income in order to receive a refund next year. 
C) Ignore the impact of income taxes in your personal financial planning. 
D) Contribute to your employer-sponsored 401(k) retirement plan at least up to the amount of the employer's matching contribution.

Question 11

It is possible to deduct some types of transportation expenses with all of the following itemized deductions except

Accepted Answer

A) medical expenses. 
B) job expenses. 
C) charitable contributions. 
D) home buying. 
A) medical expenses. 
B) job expenses. 
C) charitable contributions. 
D) home buying.

Question 12

Which is not an example of unearned income?

Accepted Answer

A) Rents 
B) Dividends 
C) Tips 
D) Royalties 
A) Rents 
B) Dividends 
C) Tips 
D) Royalties

Question 13

Matt and Kat are in the 25 percent marginal income tax bracket and are subject to the 7.65 percent Social Security tax.If Kat gets a $750 bonus,approximately what percent of this bonus would she get to keep?

Accepted Answer

A) 33 percent 
B) 67 percent 
C) 59 percent 
D) 100 percent 
A) 33 percent 
B) 67 percent 
C) 59 percent 
D) 100 percent

Question 14

All income other than capital gains is referred to as

Accepted Answer

A) gross income. 
B) earned income. 
C) ordinary income. 
D) personal income. 
A) gross income. 
B) earned income. 
C) ordinary income. 
D) personal income.

Question 15

A taxpayer who is age 65 or older and/or blind may claim an extra amount for his or her standard deduction.

Accepted Answer

A) True 
 B)False

Question 16

The amount of income tax withheld can be found on one's W-2 form.

Accepted Answer

A) True 
 B)False

Question 17

The kiddie tax applies to children under the age of 14 and means that all the child's income is taxed at their parents' marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 18

Adjustments to gross income are permitted only if you itemize deductions.

Accepted Answer

A) True 
 B)False

Question 19

Bonuses given by employers must be reported to the IRS on your income tax return.

Accepted Answer

A) True 
 B)False

Question 20

Sue is a single mom in the 15 percent marginal tax bracket.Her son,Billy,is in daycare,which costs $8,600 annually.How much will Sue's dependent care credit be if she qualifies for a 30 percent credit?

Accepted Answer

A) $6,020 
B) $2,580 
C) $903 
D) $387 
A) $6,020 
B) $2,580 
C) $903 
D) $387

The tax break for losses from passive investments begins to phase out for taxpayers higher incomes.

Tax deferral with a traditional IRA allows investment income to grow without being taxed until it is withdrawn.

Your average tax rate

Taxes withheld for Social Security and Medicare are also known as

Which of the following is not a way of reducing taxable income?

The full market value of any lost property can be deducted as a casualty or theft loss when the loss results from a sudden,unexpected,or unusual event.

If your tax is $3,728 on a taxable income of $27,825 and your tax is $3,743 on a taxable income of $27,925 you are in the 15 percent tax bracket.

Which of the following is an example of earned income?

Which of the following would be considered smart financial planning?

It is possible to deduct some types of transportation expenses with all of the following itemized deductions except

Which is not an example of unearned income?

Matt and Kat are in the 25 percent marginal income tax bracket and are subject to the 7.65 percent Social Security tax.If Kat gets a $750 bonus,approximately what percent of this bonus would she get to keep?

All income other than capital gains is referred to as

A taxpayer who is age 65 or older and/or blind may claim an extra amount for his or her standard deduction.

The amount of income tax withheld can be found on one's W-2 form.

The kiddie tax applies to children under the age of 14 and means that all the child's income is taxed at their parents' marginal tax rate.

Adjustments to gross income are permitted only if you itemize deductions.

Bonuses given by employers must be reported to the IRS on your income tax return.

Sue is a single mom in the 15 percent marginal tax bracket.Her son,Billy,is in daycare,which costs $8,600 annually.How much will Sue's dependent care credit be if she qualifies for a 30 percent credit?

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

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Exam 4: Managing Income Taxes

The tax break for losses from passive investments begins to phase out for taxpayers higher incomes.

Tax deferral with a traditional IRA allows investment income to grow without being taxed until it is withdrawn.

Your average tax rate

Taxes withheld for Social Security and Medicare are also known as

Which of the following is not a way of reducing taxable income?

The full market value of any lost property can be deducted as a casualty or theft loss when the loss results from a sudden,unexpected,or unusual event.

If your tax is $3,728 on a taxable income of $27,825 and your tax is $3,743 on a taxable income of $27,925 you are in the 15 percent tax bracket.

Which of the following is an example of earned income?

Which of the following would be considered smart financial planning?

It is possible to deduct some types of transportation expenses with all of the following itemized deductions except

Which is not an example of unearned income?

Matt and Kat are in the 25 percent marginal income tax bracket and are subject to the 7.65 percent Social Security tax.If Kat gets a $750 bonus,approximately what percent of this bonus would she get to keep?

All income other than capital gains is referred to as

A taxpayer who is age 65 or older and/or blind may claim an extra amount for his or her standard deduction.

The amount of income tax withheld can be found on one's W-2 form.

The kiddie tax applies to children under the age of 14 and means that all the child's income is taxed at their parents' marginal tax rate.

Adjustments to gross income are permitted only if you itemize deductions.

Bonuses given by employers must be reported to the IRS on your income tax return.

Sue is a single mom in the 15 percent marginal tax bracket.Her son,Billy,is in daycare,which costs $8,600 annually.How much will Sue's dependent care credit be if she qualifies for a 30 percent credit?

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