Question 1

For a dependent to qualify as an exemption,he or she must:

Accepted Answer

A) be married. 
B) be under age 16. 
C) be registered in school. 
D) receive more than one half of his or her support from the taxpayer. 
E) be an exchange student. 
A) be married. 
B) be under age 16. 
C) be registered in school. 
D) receive more than one half of his or her support from the taxpayer. 
E) be an exchange student.

Question 2

Which one of these statements correctly applies to a Roth IRA?

Accepted Answer

A) Earnings on the account are tax-free after five years. 
B) Annual contributions may exceed $7,000. 
C) Deposits must be in federally-insured accounts. 
D) Funds are only to be used for educational expenses. 
E) Only self-employed workers can contribute to a Roth IRA. 
A) Earnings on the account are tax-free after five years. 
B) Annual contributions may exceed $7,000. 
C) Deposits must be in federally-insured accounts. 
D) Funds are only to be used for educational expenses. 
E) Only self-employed workers can contribute to a Roth IRA.

Question 3

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 4

Real-estate property taxes are a major source of revenue for local governments.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

Accepted Answer

A) Correspondence audit 
B) Office audit 
C) Field audit 
D) Detailed audit 
E) Research audit 
A) Correspondence audit 
B) Office audit 
C) Field audit 
D) Detailed audit 
E) Research audit

Question 7

A ______ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical expenses and child care costs.

Accepted Answer

A) tax credit 
B) tax deduction 
C) flexible spending account 
D) tax deferred investment 
E) tax exempt investment 
A) tax credit 
B) tax deduction 
C) flexible spending account 
D) tax deferred investment 
E) tax exempt investment

Question 8

A taxpayer whose spouse recently died and who has a dependent is most likely to use the ____________ filing status.

Accepted Answer

A) single 
B) married filing joint return 
C) married filing separate return 
D) head of household 
E) qualifying widow or widower 
A) single 
B) married filing joint return 
C) married filing separate return 
D) head of household 
E) qualifying widow or widower

Question 9

The main purpose of taxes is to:

Accepted Answer

A) generate revenue for funding government activities. 
B) reduce the chances of inflation. 
C) create jobs. 
D) discourage use of certain goods and services. 
E) decrease competition from foreign companies. 
A) generate revenue for funding government activities. 
B) reduce the chances of inflation. 
C) create jobs. 
D) discourage use of certain goods and services. 
E) decrease competition from foreign companies.

Question 10

Haley Thomas has adjusted gross income of $40,000.She paid $3,600 in property taxes during the year.How much of the tax can she include as an itemized deduction?

Accepted Answer

A) $3,600 
B) $3,000 
C) $1,800 
D) $600 
E) $0 
A) $3,600 
B) $3,000 
C) $1,800 
D) $600 
E) $0

Question 11

Ms.Nelson is a single mom with three children; Dana is 18 and a high school senior,Derrick is 20 and a full-time college student,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 12

For which of the following types of credit plans is the interest tax deductible?

Accepted Answer

A) Home equity loan 
B) Auto loan 
C) Credit card 
D) Life insurance policy cash value loan 
E) Personal cash loan from a credit union 
A) Home equity loan 
B) Auto loan 
C) Credit card 
D) Life insurance policy cash value loan 
E) Personal cash loan from a credit union

Question 13

Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity,bringing her total itemized deductions to $16,000.If Michele is in a 28 percent tax bracket,how much will this $2,000 contribution reduce her taxes?

Accepted Answer

A) $0 
B) $560 
C) $1,600 
D) $2,000 
E) $4,480 
A) $0 
B) $560 
C) $1,600 
D) $2,000 
E) $4,480

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

To minimize taxes owed,you should do the following if you expect to have a higher tax rate next year:

Accepted Answer

A) accelerate the receipt of income into the current year. 
B) delay the receipt of income until next year. 
C) accelerate deductions into the current year. 
D) All of these 
E) None of these 
A) accelerate the receipt of income into the current year. 
B) delay the receipt of income until next year. 
C) accelerate deductions into the current year. 
D) All of these 
E) None of these

Question 16

A person has $4,000 in medical expenses and an adjusted gross income of $32,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Accepted Answer

A) $300 
B) $1,600 
C) $2,400 
D) $4,000 
E) $32,000 
A) $300 
B) $1,600 
C) $2,400 
D) $4,000 
E) $32,000

Question 17

A person's filing status is affected by marital status and dependents.

Accepted Answer

A) True 
 B)False

Question 18

Alex Bates goes on The Price Is Right and earns $875,000 in winnings.What type of income is this?

Accepted Answer

A) Earned income 
B) Investment income 
C) Passive income 
D) Other income 
E) Deferred income 
A) Earned income 
B) Investment income 
C) Passive income 
D) Other income 
E) Deferred income

Question 19

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________________ tax.

Accepted Answer

A) deferred 
B) bonus 
C) excess 
D) capital gains 
E) alternative minimum 
A) deferred 
B) bonus 
C) excess 
D) capital gains 
E) alternative minimum

Question 20

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

For a dependent to qualify as an exemption,he or she must:

Which one of these statements correctly applies to a Roth IRA?

Which one of these investments produces tax-exempt income?

Real-estate property taxes are a major source of revenue for local governments.

Which type of audit is the least complicated for taxpayers?

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

A ______ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical expenses and child care costs.

A taxpayer whose spouse recently died and who has a dependent is most likely to use the ____________ filing status.

The main purpose of taxes is to:

Haley Thomas has adjusted gross income of $40,000.She paid $3,600 in property taxes during the year.How much of the tax can she include 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 full-time college student,and Tonya is 25 and unemployed.All three children live at home.How many exemptions can Ms.Nelson claim on her tax return?

For which of the following types of credit plans is the interest tax deductible?

Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity,bringing her total itemized deductions to $16,000.If Michele is in a 28 percent tax bracket,how much will this $2,000 contribution reduce her taxes?

Approximately what percent of tax filers are audited each year?

To minimize taxes owed,you should do the following if you expect to have a higher tax rate next year:

A person has $4,000 in medical expenses and an adjusted gross income of $32,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

A person's filing status is affected by marital status and dependents.

Alex Bates goes on The Price Is Right and earns $875,000 in winnings.What type of income is this?

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________________ tax.

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

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 Stock

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters

Exam 4: Planning Your Tax Strategy

For a dependent to qualify as an exemption,he or she must:

Which one of these statements correctly applies to a Roth IRA?

Which one of these investments produces tax-exempt income?

Real-estate property taxes are a major source of revenue for local governments.

Which type of audit is the least complicated for taxpayers?

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

A ______ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical expenses and child care costs.

A taxpayer whose spouse recently died and who has a dependent is most likely to use the ____________ filing status.

The main purpose of taxes is to:

Haley Thomas has adjusted gross income of $40,000.She paid $3,600 in property taxes during the year.How much of the tax can she include 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 full-time college student,and Tonya is 25 and unemployed.All three children live at home.How many exemptions can Ms.Nelson claim on her tax return?

For which of the following types of credit plans is the interest tax deductible?

Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity,bringing her total itemized deductions to $16,000.If Michele is in a 28 percent tax bracket,how much will this $2,000 contribution reduce her taxes?

Approximately what percent of tax filers are audited each year?

To minimize taxes owed,you should do the following if you expect to have a higher tax rate next year:

A person has $4,000 in medical expenses and an adjusted gross income of $32,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

A person's filing status is affected by marital status and dependents.

Alex Bates goes on The Price Is Right and earns $875,000 in winnings.What type of income is this?

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________________ tax.

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

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 Stock

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters