Question 1

Pete and Pam are married with four dependent children.Which of the following filing statuses can Pete and Pam use if they want to legally file one tax return?

Accepted Answer

A) Married filing separately 
B) Married filing jointly 
C) Head of household 
D) Single 
E) Qualifying widow or widower with dependent child 
A) Married filing separately 
B) Married filing jointly 
C) Head of household 
D) Single 
E) Qualifying widow or widower with dependent child

Question 2

You made an error when you filed your tax return last year.You can correct this error by filing:

Accepted Answer

A) Form 1040-ES. 
B) Form 1040X. 
C) Form 1040EZ. 
D) Schedule A. 
E) Schedule D. 
A) Form 1040-ES. 
B) Form 1040X. 
C) Form 1040EZ. 
D) Schedule A. 
E) Schedule D.

Question 3

Jamil and Vicki have one child,aged 3,for whom they paid childcare expenses of $2,500 this year.If they are eligible for a 20% dependent care credit plus child tax credit,by how much will these credits reduce their tax liability?

Accepted Answer

A) $500 
B) $1,500 
C) $2,000 
D) $2,500 
E) $3,000 
A) $500 
B) $1,500 
C) $2,000 
D) $2,500 
E) $3,000

Question 4

Based on the given information,Max's portfolio income is: $$\begin{array} { | l | l | } 
\hline \text { Interest from savings account } & \$ 1,000 \
\hline \text { Capital gains realized } & \$ 5,000 \
\hline \text { Salary } & \$ 8,000 \
\hline
\end{array}$$

Accepted Answer

A) $13,000. 
B) $6,000. 
C) $8,000. 
D) $16,000. 
E) $18,000. 
A) $13,000. 
B) $6,000. 
C) $8,000. 
D) $16,000. 
E) $18,000.

Question 5

If your income is high,then there is ____________ probability of your income being audited. ​

Accepted Answer

A) zero 
B) an equal 
C) a low 
D) a high 
A) zero 
B) an equal 
C) a low 
D) a high

Question 6

If you do not wish to itemize deductions,the other deduction you can take is the:

Accepted Answer

A) pay-as-you-go deduction. 
B) bracket deduction. 
C) standard deduction. 
D) exemption deduction. 
E) withholding allowance deduction. 
A) pay-as-you-go deduction. 
B) bracket deduction. 
C) standard deduction. 
D) exemption deduction. 
E) withholding allowance deduction.

Question 7

You would typically include _____ in your gross income.

Accepted Answer

A) child-support payments 
B) life insurance death benefit payments 
C) municipal bond interest 
D) income from pensions 
E) personal exemptions 
A) child-support payments 
B) life insurance death benefit payments 
C) municipal bond interest 
D) income from pensions 
E) personal exemptions

Question 8

The total amount of income tax you owe in one year is your tax:

Accepted Answer

A) withholding. 
B) credit. 
C) rate. 
D) refund. 
E) liability. 
A) withholding. 
B) credit. 
C) rate. 
D) refund. 
E) liability.

Question 9

John and Charlotte are considering contributing $1,000 to their church.This contribution will bring their total itemized deductions to $2,000.Assuming they are in the 15% marginal tax bracket,how much will they save in taxes by contributing the $1,000 to their church?

Accepted Answer

A) $0 
B) $150 
C) $300 
D) $500 
E) $1,000 
A) $0 
B) $150 
C) $300 
D) $500 
E) $1,000

Question 10

Gross income minus tax-exempt income equals adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 11

A tax audit is a(n):

Accepted Answer

A) Internal Revenue Service (IRS)revision of a previously filed return. 
B) Internal Revenue Service (IRS)attempt to verify the accuracy of a return. 
C) Internal Revenue Service (IRS)charge of illegal action. 
D) U.S.Tax Court action. 
E) U.S.Tax Court decision. 
A) Internal Revenue Service (IRS)revision of a previously filed return. 
B) Internal Revenue Service (IRS)attempt to verify the accuracy of a return. 
C) Internal Revenue Service (IRS)charge of illegal action. 
D) U.S.Tax Court action. 
E) U.S.Tax Court decision.

Question 12

_____ are the deductions from adjusted gross income (AGI)that are based on the number of persons supported by the taxpayer's income.

Accepted Answer

A) Taxable assets 
B) Tax credits 
C) Liabilities 
D) Extensions 
E) Exemptions 
A) Taxable assets 
B) Tax credits 
C) Liabilities 
D) Extensions 
E) Exemptions

Question 13

Mark is not married and has dependent parents.He pays more than half of the cost of keeping up a home for himself and his parents.His tax filing status is _____.

Accepted Answer

A) single taxpayer 
B) married filing jointly 
C) married filing separately 
D) head of household 
E) qualifying widow 
A) single taxpayer 
B) married filing jointly 
C) married filing separately 
D) head of household 
E) qualifying widow

Question 14

Sarah is a homeowner and a single taxpayer.She has owned and occupied the house as a principal residence for the last 8 years.In the current taxable year,she receives a promotion.She sells her home and moves to another area.The capital gain on the sale of the principal residence will:

Accepted Answer

A) be taxable as ordinary income. 
B) be taxable at a rate of 25%. 
C) be taxable at the appropriate short-term capital gains rate. 
D) be taxable excluding the first $250,000 of the gain. 
E) not be taxable because the relocation is a job-related move. 
A) be taxable as ordinary income. 
B) be taxable at a rate of 25%. 
C) be taxable at the appropriate short-term capital gains rate. 
D) be taxable excluding the first $250,000 of the gain. 
E) not be taxable because the relocation is a job-related move.

Question 15

A capital gain is the result of:

Accepted Answer

A) selling an asset for less than its purchase price. 
B) holding an asset that has depreciated. 
C) selling an asset at its purchase price. 
D) selling an asset for more than its purchase price. 
E) buying a new asset at a rate lower than the market rate of the asset. 
A) selling an asset for less than its purchase price. 
B) holding an asset that has depreciated. 
C) selling an asset at its purchase price. 
D) selling an asset for more than its purchase price. 
E) buying a new asset at a rate lower than the market rate of the asset.

Question 16

Which of the following individuals should pay estimated taxes?

Accepted Answer

A) An entrepreneur 
B) A teacher 
C) A corporate manager 
D) A State worker 
E) A State police officer 
A) An entrepreneur 
B) A teacher 
C) A corporate manager 
D) A State worker 
E) A State police officer

Question 17

The alternative minimum tax (AMT)is applicable to taxpayers with moderate levels of income only.

Accepted Answer

A) True 
 B)False

Question 18

Tax credits are dollar for dollar reductions in taxable income.

Accepted Answer

A) True 
 B)False

Question 19

From the information given below,determine Marcie's gross income for tax purposes.
 $$\begin{array} { | l | l | } 
\hline \text { Salary } & \$ 40,000 \
\hline \text { Interest (checking account) } & \$ 50 \
\hline \text { Cash received as birthday gift } & \$ 900 \
\hline \text { Dividends (mutual funds) } & \$ 500 \
\hline \text { Inheritance received on father's death } & \$ 22,000 \
\hline \text { Cash received from insurance for accident claim settlement } & \$ 3,200 \
\hline \text { Cash dividend from stock } & \$ 750 \
\hline
\end{array}$$

Accepted Answer

Marcie's gross incom

Question 20

Which of the following statements is true about tax credits?

Accepted Answer

A) They are deductions that depend on the taxpayer's filing status,age,and vision and that can be claimed by a taxpayer whose total itemized deductions are small. 
B) They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income. 
C) They represent the income remaining after subtracting all allowable adjustments to income from the gross income. 
D) They are personal expenditures that can be deducted from adjusted gross income when determining taxable income. 
E) They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due. 
A) They are deductions that depend on the taxpayer's filing status,age,and vision and that can be claimed by a taxpayer whose total itemized deductions are small. 
B) They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income. 
C) They represent the income remaining after subtracting all allowable adjustments to income from the gross income. 
D) They are personal expenditures that can be deducted from adjusted gross income when determining taxable income. 
E) They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due.

Pete and Pam are married with four dependent children.Which of the following filing statuses can Pete and Pam use if they want to legally file one tax return?

You made an error when you filed your tax return last year.You can correct this error by filing:

Jamil and Vicki have one child,aged 3,for whom they paid childcare expenses of $2,500 this year.If they are eligible for a 20% dependent care credit plus child tax credit,by how much will these credits reduce their tax liability?

Based on the given information,Max's portfolio income is: Interest from savings account \ 1,000 Capital gains realized \ 5,000 Salary \ 8,000

If your income is high,then there is ____________ probability of your income being audited.

If you do not wish to itemize deductions,the other deduction you can take is the:

You would typically include _____ in your gross income.

The total amount of income tax you owe in one year is your tax:

John and Charlotte are considering contributing $1,000 to their church.This contribution will bring their total itemized deductions to $2,000.Assuming they are in the 15% marginal tax bracket,how much will they save in taxes by contributing the $1,000 to their church?

Gross income minus tax-exempt income equals adjusted gross income.

A tax audit is a(n):

_____ are the deductions from adjusted gross income (AGI)that are based on the number of persons supported by the taxpayer's income.

Mark is not married and has dependent parents.He pays more than half of the cost of keeping up a home for himself and his parents.His tax filing status is _____.

Sarah is a homeowner and a single taxpayer.She has owned and occupied the house as a principal residence for the last 8 years.In the current taxable year,she receives a promotion.She sells her home and moves to another area.The capital gain on the sale of the principal residence will:

A capital gain is the result of:

Which of the following individuals should pay estimated taxes?

The alternative minimum tax (AMT)is applicable to taxpayers with moderate levels of income only.

Tax credits are dollar for dollar reductions in taxable income.

Which of the following statements is true about tax credits?

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 3: Preparing Your Taxes

Pete and Pam are married with four dependent children.Which of the following filing statuses can Pete and Pam use if they want to legally file one tax return?

You made an error when you filed your tax return last year.You can correct this error by filing:

Jamil and Vicki have one child,aged 3,for whom they paid childcare expenses of $2,500 this year.If they are eligible for a 20% dependent care credit plus child tax credit,by how much will these credits reduce their tax liability?

Based on the given information,Max's portfolio income is: Interest from savings account \ 1,000 Capital gains realized \ 5,000 Salary \ 8,000

If your income is high,then there is ____________ probability of your income being audited. ​

If you do not wish to itemize deductions,the other deduction you can take is the:

You would typically include _____ in your gross income.

The total amount of income tax you owe in one year is your tax:

John and Charlotte are considering contributing $1,000 to their church.This contribution will bring their total itemized deductions to $2,000.Assuming they are in the 15% marginal tax bracket,how much will they save in taxes by contributing the $1,000 to their church?

Gross income minus tax-exempt income equals adjusted gross income.

A tax audit is a(n):

_____ are the deductions from adjusted gross income (AGI)that are based on the number of persons supported by the taxpayer's income.

Mark is not married and has dependent parents.He pays more than half of the cost of keeping up a home for himself and his parents.His tax filing status is _____.

Sarah is a homeowner and a single taxpayer.She has owned and occupied the house as a principal residence for the last 8 years.In the current taxable year,she receives a promotion.She sells her home and moves to another area.The capital gain on the sale of the principal residence will:

A capital gain is the result of:

Which of the following individuals should pay estimated taxes?

The alternative minimum tax (AMT)is applicable to taxpayers with moderate levels of income only.

Tax credits are dollar for dollar reductions in taxable income.

Which of the following statements is true about tax credits?

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

If your income is high,then there is ____________ probability of your income being audited.