Question 1

The tax credit(s) for qualifying higher education expenses is

Accepted Answer

A) the American Opportunity credit. 
B) the earned income credit. 
C) the lifetime learning credit. 
D) the American Opportunity credit and lifetime learning credit. 
A) the American Opportunity credit. 
B) the earned income credit. 
C) the lifetime learning credit. 
D) the American Opportunity credit and lifetime learning credit.

Question 2

A taxpayer with a taxable income greater than $100,000 must use the tax-rate schedules rather than the tax tables to find his or her tax liability.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following deductible expenses can be prepaid for tax purposes?

Accepted Answer

A) Personal property taxes 
B) Charitable contributions 
C) Medical expenses 
D) All of these 
A) Personal property taxes 
B) Charitable contributions 
C) Medical expenses 
D) All of these

Question 4

The key to reducing one's tax liability is to reduce taxable income rather than gross income.

Accepted Answer

A) True 
 B)False

Question 5

The health insurance premium tax credit can help anyone defray the cost of health insurance.

Accepted Answer

A) True 
 B)False

Question 6

A long-term capital gain (or loss) occurs when the asset is held for over one year.

Accepted Answer

A) True 
 B)False

Question 7

An employed taxpayer's effective marginal tax rate on income is higher than his or her federal marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 8

Most tax shelters are methods permitting an investor to avoid taxes forever.

Accepted Answer

A) True 
 B)False

Question 9

Figure 4-1
 
-Refer to Figure 4-1.Tony and Liz have just inherited $25,000.Which of the following statements is true?

Accepted Answer

A) The $25,000 will be taxable income in the year received. 
B) The $25,000 is an exclusion for federal income taxes. 
C) They should invest this money in corporate bonds to save on taxes. 
D) The $25,000 will be taxable income in the year received, and they should invest this money in corporate bonds to save on taxes. 
A) The $25,000 will be taxable income in the year received. 
B) The $25,000 is an exclusion for federal income taxes. 
C) They should invest this money in corporate bonds to save on taxes. 
D) The $25,000 will be taxable income in the year received, and they should invest this money in corporate bonds to save on taxes.

Question 10

A taxpayer in the 35 percent marginal tax bracket would pay less tax by holding an investment with capital gains over one year.

Accepted Answer

A) True 
 B)False

Question 11

An extra benefit of a defined-contribution retirement plan is that most employers offer full or partial ____ to employees accounts.

Accepted Answer

A) tax breaks 
B) earned income credit 
C) matching contributions 
D) pretax income 
A) tax breaks 
B) earned income credit 
C) matching contributions 
D) pretax income

Question 12

All of the income received from Social Security benefits must be reported as gross income on your federal income tax return.

Accepted Answer

A) True 
 B)False

Question 13

You just sold your comic book collection that you had worked on for the past ten years for a capital gain of $7,500.Assuming you are in the 15 percent marginal tax bracket,how much federal income tax will be due on this gain?

Accepted Answer

A) $0 
B) $1,125 
C) $375 
D) $750 
A) $0 
B) $1,125 
C) $375 
D) $750

Question 14

Which of the following investments normally produce(s) tax-exempt income?

Accepted Answer

A) Stocks 
B) Municipal bonds 
C) Corporate bonds 
D) All of these 
A) Stocks 
B) Municipal bonds 
C) Corporate bonds 
D) All of these

Question 15

A casualty or theft loss is difficult to qualify for because the loss must

Accepted Answer

A) be unreimbursed. 
B) exceed 10 percent of adjusted gross income plus $100. 
C) be in cash rather than property. 
D) be unreimbursed and exceed 10 percent of adjusted gross income plus $100. 
A) be unreimbursed. 
B) exceed 10 percent of adjusted gross income plus $100. 
C) be in cash rather than property. 
D) be unreimbursed and exceed 10 percent of adjusted gross income plus $100.

Question 16

A single individual pays $7,813 on a taxable income of $47,810 and $7,838 on a taxable income of $47,910.What is the marginal tax rate?

Accepted Answer

A) 15 percent 
B) 16 percent 
C) 25 percent 
D) 50 percent 
A) 15 percent 
B) 16 percent 
C) 25 percent 
D) 50 percent

Question 17

Qualified tuition programs include

Accepted Answer

A) 529 plans. 
B) prepaid tuition plans. 
C) college savings plans. 
D) (all of these) 
A) 529 plans. 
B) prepaid tuition plans. 
C) college savings plans. 
D) (all of these)

Question 18

Adjustments to gross income

Accepted Answer

A) are subtracted from gross income. 
B) help one qualify for other deductions. 
C) can be taken even if one takes the standard deduction. 
D) all of these. 
A) are subtracted from gross income. 
B) help one qualify for other deductions. 
C) can be taken even if one takes the standard deduction. 
D) all of these.

Question 19

Flexible spending accounts reduce taxes because contributions to these accounts are made with pretax dollars.

Accepted Answer

A) True 
 B)False

Question 20

Estimating taxes requires taxpayers to send quarterly installment payments to the IRS.

Accepted Answer

A) True 
 B)False

The tax credit(s) for qualifying higher education expenses is

A taxpayer with a taxable income greater than $100,000 must use the tax-rate schedules rather than the tax tables to find his or her tax liability.

Which of the following deductible expenses can be prepaid for tax purposes?

The key to reducing one's tax liability is to reduce taxable income rather than gross income.

The health insurance premium tax credit can help anyone defray the cost of health insurance.

A long-term capital gain (or loss) occurs when the asset is held for over one year.

An employed taxpayer's effective marginal tax rate on income is higher than his or her federal marginal tax rate.

Most tax shelters are methods permitting an investor to avoid taxes forever.

Figure 4-1 -Refer to Figure 4-1.Tony and Liz have just inherited $25,000.Which of the following statements is true?

A taxpayer in the 35 percent marginal tax bracket would pay less tax by holding an investment with capital gains over one year.

An extra benefit of a defined-contribution retirement plan is that most employers offer full or partial ____ to employees accounts.

All of the income received from Social Security benefits must be reported as gross income on your federal income tax return.

You just sold your comic book collection that you had worked on for the past ten years for a capital gain of $7,500.Assuming you are in the 15 percent marginal tax bracket,how much federal income tax will be due on this gain?

Which of the following investments normally produce(s) tax-exempt income?

A casualty or theft loss is difficult to qualify for because the loss must

A single individual pays $7,813 on a taxable income of $47,810 and $7,838 on a taxable income of $47,910.What is the marginal tax rate?

Qualified tuition programs include

Adjustments to gross income

Flexible spending accounts reduce taxes because contributions to these accounts are made with pretax dollars.

Estimating taxes requires taxpayers to send quarterly installment payments to the IRS.

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

Exam 4: Managing Income Taxes

The tax credit(s) for qualifying higher education expenses is

A taxpayer with a taxable income greater than $100,000 must use the tax-rate schedules rather than the tax tables to find his or her tax liability.

Which of the following deductible expenses can be prepaid for tax purposes?

The key to reducing one's tax liability is to reduce taxable income rather than gross income.

The health insurance premium tax credit can help anyone defray the cost of health insurance.

A long-term capital gain (or loss) occurs when the asset is held for over one year.

An employed taxpayer's effective marginal tax rate on income is higher than his or her federal marginal tax rate.

Most tax shelters are methods permitting an investor to avoid taxes forever.

Figure 4-1 -Refer to Figure 4-1.Tony and Liz have just inherited $25,000.Which of the following statements is true?

A taxpayer in the 35 percent marginal tax bracket would pay less tax by holding an investment with capital gains over one year.

An extra benefit of a defined-contribution retirement plan is that most employers offer full or partial ____ to employees accounts.

All of the income received from Social Security benefits must be reported as gross income on your federal income tax return.

You just sold your comic book collection that you had worked on for the past ten years for a capital gain of $7,500.Assuming you are in the 15 percent marginal tax bracket,how much federal income tax will be due on this gain?

Which of the following investments normally produce(s) tax-exempt income?

A casualty or theft loss is difficult to qualify for because the loss must

A single individual pays $7,813 on a taxable income of $47,810 and $7,838 on a taxable income of $47,910.What is the marginal tax rate?

Qualified tuition programs include

Adjustments to gross income

Flexible spending accounts reduce taxes because contributions to these accounts are made with pretax dollars.

Estimating taxes requires taxpayers to send quarterly installment payments to the IRS.

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