Question 1

The interest paid on which type of loan is not tax deductible?

Accepted Answer

A)  Home equity loan used to purchase an automobile 
B)  Credit card 
C)  Mortgage for a primary residence 
D)  Mortgage for a second home 
E)  Second mortgage for a primary residence 
A)  Home equity loan used to purchase an automobile 
B)  Credit card 
C)  Mortgage for a primary residence 
D)  Mortgage for a second home 
E)  Second mortgage for a primary residence

Question 2

Tim Bridges owns a bass fishing boat. His state imposes an annual 3.25 percent tax on the current value of this boat. What type of tax is this most likely to be?

Accepted Answer

A)  General sales tax 
B)  Excise tax 
C)  Personal property tax 
D)  Income tax 
E)  Estate tax 
A)  General sales tax 
B)  Excise tax 
C)  Personal property tax 
D)  Income tax 
E)  Estate tax

Question 3

Which one of the following people is least likely to have to file a federal income tax return?

Accepted Answer

A)  A U.S. citizen who is a resident of Puerto Rico 
B)  A U.S. citizen living and working in a foreign country 
C)  A person earning less than $9,000 
D)  A person over age 65 
E)  A college student 
A)  A U.S. citizen who is a resident of Puerto Rico 
B)  A U.S. citizen living and working in a foreign country 
C)  A person earning less than $9,000 
D)  A person over age 65 
E)  A college student

Question 4

Two types of education savings plans are the Coverdell Education Savings Account and the:

Accepted Answer

A)  401k. 
B)  529 plan. 
C)  Keogh plan. 
D)  traditional IRA. 
E)  Roth IRA. 
A)  401k. 
B)  529 plan. 
C)  Keogh plan. 
D)  traditional IRA. 
E)  Roth IRA.

Question 5

A drawback of Flexible Spending Accounts (FSA) is that any account funds must be used to pay for expenses incurred before year's end or the money is lost.

Accepted Answer

A) True 
 B)False

Question 6

Taxable income is used to compute a person's:

Accepted Answer

A)  exemptions. 
B)  income tax. 
C)  deductions. 
D)  capital gains. 
E)  exclusions. 
A)  exemptions. 
B)  income tax. 
C)  deductions. 
D)  capital gains. 
E)  exclusions.

Question 7

Which one of the following is most apt to qualify as an itemized deduction?

Accepted Answer

A)  Interest on a credit card or charge account 
B)  Unreimbursed job-related travel expenses 
C)  Cost of commuting to work 
D)  Life insurance premiums 
E)  Traffic violation fee 
A)  Interest on a credit card or charge account 
B)  Unreimbursed job-related travel expenses 
C)  Cost of commuting to work 
D)  Life insurance premiums 
E)  Traffic violation fee

Question 8

Ms. Nelson is a single mom with three children; Dana is 18 and a high school senior, Derrick is 20 and a college sophomore, and Tonya is 25 and unemployed. All three children live at home. How many exemptions can Ms. Nelson claim on her tax return?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
E)  0 
A)  1 
B)  2 
C)  3 
D)  4 
E)  0

Question 9

Which type of audit is the least complicated for taxpayers?

Accepted Answer

A)  A field audit 
B)  An office audit 
C)  A research audit 
D)  A correspondence audit 
E)  A documentation audit 
A)  A field audit 
B)  An office audit 
C)  A research audit 
D)  A correspondence audit 
E)  A documentation audit

Question 10

Factors that affect a person's filing status include marital status and:

Accepted Answer

A)  employment status. 
B)  age. 
C)  occupation. 
D)  dependents. 
E)  place of residence. 
A)  employment status. 
B)  age. 
C)  occupation. 
D)  dependents. 
E)  place of residence.

Question 11

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

Accepted Answer

A)  adjusted gross income. 
B)  taxable income. 
C)  earned income. 
D)  passive income. 
E)  total exclusions. 
A)  adjusted gross income. 
B)  taxable income. 
C)  earned income. 
D)  passive income. 
E)  total exclusions.

Question 12

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

Accepted Answer

A)  $500. 
B)  $36. 
C)  $464. 
D)  $280. 
E)  $180.
$500 × .36 = $180 
A)  $500. 
B)  $36. 
C)  $464. 
D)  $280. 
E)  $180.
$500 × .36 = $180

Question 13

An exclusion affects a person's taxes by:

Accepted Answer

A)  reducing the amount of taxable income. 
B)  increasing itemized deductions. 
C)  decreasing itemized deductions. 
D)  decreasing the number of exemptions a person can claim. 
E)  increasing the number of exemptions a person can claim. 
A)  reducing the amount of taxable income. 
B)  increasing itemized deductions. 
C)  decreasing itemized deductions. 
D)  decreasing the number of exemptions a person can claim. 
E)  increasing the number of exemptions a person can claim.

Question 14

Approximately what percent of tax filers are audited each year?

Accepted Answer

A)  1% 
B)  3% 
C)  5% 
D)  10% 
E)  15% 
A)  1% 
B)  3% 
C)  5% 
D)  10% 
E)  15%

Question 15

A general sales tax is also referred to as an excise tax.

Accepted Answer

A) True 
 B)False

Question 16

An estate tax is imposed on the value of an individual's property at the time of his or her death.

Accepted Answer

A) True 
 B)False

Question 17

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

Accepted Answer

A) True 
 B)False

Question 18

Earnings from a limited partnership would be an example of ____________ income.

Accepted Answer

A)  passive 
B)  capital gain 
C)  portfolio 
D)  earned 
E)  excluded 
A)  passive 
B)  capital gain 
C)  portfolio 
D)  earned 
E)  excluded

Question 19

Which one of these investments produces tax-exempt income?

Accepted Answer

A)  U.S. savings bonds 
B)  Corporate stock 
C)  Stock mutual fund 
D)  Municipal bond 
E)  Corporate bond 
A)  U.S. savings bonds 
B)  Corporate stock 
C)  Stock mutual fund 
D)  Municipal bond 
E)  Corporate bond

Question 20

A tax on the value of automobiles, boats, or furniture is referred to as a personal property tax.

Accepted Answer

A) True 
 B)False

The interest paid on which type of loan is not tax deductible?

Tim Bridges owns a bass fishing boat. His state imposes an annual 3.25 percent tax on the current value of this boat. What type of tax is this most likely to be?

Which one of the following people is least likely to have to file a federal income tax return?

Two types of education savings plans are the Coverdell Education Savings Account and the:

A drawback of Flexible Spending Accounts (FSA) is that any account funds must be used to pay for expenses incurred before year's end or the money is lost.

Taxable income is used to compute a person's:

Which one of the following is most apt to qualify as an itemized deduction?

Ms. Nelson is a single mom with three children; Dana is 18 and a high school senior, Derrick is 20 and a college sophomore, and Tonya is 25 and unemployed. All three children live at home. How many exemptions can Ms. Nelson claim on her tax return?

Which type of audit is the least complicated for taxpayers?

Factors that affect a person's filing status include marital status and:

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

An exclusion affects a person's taxes by:

Approximately what percent of tax filers are audited each year?

A general sales tax is also referred to as an excise tax.

An estate tax is imposed on the value of an individual's property at the time of his or her death.

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

Earnings from a limited partnership would be an example of ____________ income.

Which one of these investments produces tax-exempt income?

A tax on the value of automobiles, boats, or furniture is referred to as a personal property tax.

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 4: Planning Your Tax Strategy

The interest paid on which type of loan is not tax deductible?

Tim Bridges owns a bass fishing boat. His state imposes an annual 3.25 percent tax on the current value of this boat. What type of tax is this most likely to be?

Which one of the following people is least likely to have to file a federal income tax return?

Two types of education savings plans are the Coverdell Education Savings Account and the:

A drawback of Flexible Spending Accounts (FSA) is that any account funds must be used to pay for expenses incurred before year's end or the money is lost.

Taxable income is used to compute a person's:

Which one of the following is most apt to qualify as an itemized deduction?

Ms. Nelson is a single mom with three children; Dana is 18 and a high school senior, Derrick is 20 and a college sophomore, and Tonya is 25 and unemployed. All three children live at home. How many exemptions can Ms. Nelson claim on her tax return?

Which type of audit is the least complicated for taxpayers?

Factors that affect a person's filing status include marital status and:

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

An exclusion affects a person's taxes by:

Approximately what percent of tax filers are audited each year?

A general sales tax is also referred to as an excise tax.

An estate tax is imposed on the value of an individual's property at the time of his or her death.

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

Earnings from a limited partnership would be an example of ____________ income.

Which one of these investments produces tax-exempt income?

A tax on the value of automobiles, boats, or furniture is referred to as a personal property tax.

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters