Question 1

Which of the following is NOT a tax that most people pay?

Accepted Answer

A)  Federal taxes on earnings 
B)  Federal taxes on possessions 
C)  Local taxes on property 
D)  State taxes on purchases 
A)  Federal taxes on earnings 
B)  Federal taxes on possessions 
C)  Local taxes on property 
D)  State taxes on purchases B

Question 2

A tax due on the purchase of gasoline is called a(n)

Accepted Answer

A)  Estate tax. 
B)  Excise tax. 
C)  Income tax. 
D)  Real estate property tax. 
E)  Inheritance tax. 
A)  Estate tax. 
B)  Excise tax. 
C)  Income tax. 
D)  Real estate property tax. 
E)  Inheritance tax. B

Question 3

According to Tax Service Warnings, who is responsible for supplying accurate and complete information for completing a tax return?

Accepted Answer

A)  Professional tax preparer 
B)  IRS enrolled agent 
C)  Taxpayer 
D)  Taxpayer's dependents 
E)  Taxpayer's attorney 
A)  Professional tax preparer 
B)  IRS enrolled agent 
C)  Taxpayer 
D)  Taxpayer's dependents 
E)  Taxpayer's attorney C

Question 4

George Franklin paid taxes of $4,375 on a taxable income of $32,000. What was his average tax rate?

Accepted Answer

A)  10% 
B)  13.7% 
C)  15% 
D)  25% 
E)  28% 
A)  10% 
B)  13.7% 
C)  15% 
D)  25% 
E)  28%

Question 5

The amount levied on the value of property bequeathed by a deceased person is

Accepted Answer

A)  Inheritance tax. 
B)  Excise tax. 
C)  Social Security tax. 
D)  Real estate property tax. 
E)  Sales tax. 
A)  Inheritance tax. 
B)  Excise tax. 
C)  Social Security tax. 
D)  Real estate property tax. 
E)  Sales tax.

Question 6

Tax rate schedules list average tax rates.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a valid form for filing federal income taxes?

Accepted Answer

A)  1040EZ 
B)  1040A 
C)  1040 
D)  1040X 
E)  1040Z 
A)  1040EZ 
B)  1040A 
C)  1040 
D)  1040X 
E)  1040Z

Question 8

Federal income tax returns must be filed by April 1 of each year.

Accepted Answer

A) True 
 B)False

Question 9

Janet is completing her federal income taxes for the year and has identified the amounts listed here. How much can she rightfully deduct? 
• AGI: $42,000
• Medical and dental expenses: $1,100
• State income taxes: $1,000
• Mortgage interest: $7,000
• Charitable contributions: $1,250

Accepted Answer

A)  $3,350 
B)  $7,000 
C)  $8,250 
D)  $9,250 
E)  $10,350 
A)  $3,350 
B)  $7,000 
C)  $8,250 
D)  $9,250 
E)  $10,350

Question 10

"Tax Freedom Day" represents how long the average person works to pay her or his taxes each year.

Accepted Answer

A) True 
 B)False

Question 11

When Paul completes his taxes, he can include all of the following as exemptions except

Accepted Answer

A)  His 12-year-old son. 
B)  Himself. 
C)  His 22-year-old daughter who is a full-time student. 
D)  His wife. 
E)  His 20-year-old son who is working full-time and living in an apartment. 
A)  His 12-year-old son. 
B)  Himself. 
C)  His 22-year-old daughter who is a full-time student. 
D)  His wife. 
E)  His 20-year-old son who is working full-time and living in an apartment.

Question 12

Form 4868 allows a taxpayer to obtain a six-month extension on filing and paying federal taxes without penalty.

Accepted Answer

A) True 
 B)False

Question 13

The major sections of Form 1040 include all of the following except

Accepted Answer

A)  Filing status and exemptions. 
B)  Adjustments to income (AGI). 
C)  Tax credits. 
D)  Signature. 
E)  All of these are major sections of Form 1040. 
A)  Filing status and exemptions. 
B)  Adjustments to income (AGI). 
C)  Tax credits. 
D)  Signature. 
E)  All of these are major sections of Form 1040.

Question 14

Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction?

Accepted Answer

A)  $10,000 gift to her cousin 
B)  Credit card interest 
C)  Medical and dental expenses less than 10% of AGI 
D)  Miscellaneous expenses that exceed 2% of AGI 
E)  Moving expenses for a new job that is 25 miles from her old home 
A)  $10,000 gift to her cousin 
B)  Credit card interest 
C)  Medical and dental expenses less than 10% of AGI 
D)  Miscellaneous expenses that exceed 2% of AGI 
E)  Moving expenses for a new job that is 25 miles from her old home

Question 15

You may be required to make estimated tax payments if

Accepted Answer

A)  You receive a paycheck with taxes withheld. 
B)  You do not have interest income from savings. 
C)  You have no pension payments. 
D)  You are an independent contractor. 
E)  You have no royalties. 
A)  You receive a paycheck with taxes withheld. 
B)  You do not have interest income from savings. 
C)  You have no pension payments. 
D)  You are an independent contractor. 
E)  You have no royalties.

Question 16

The tax that is a major source of revenue for local governments is called a(n)

Accepted Answer

A)  Estate tax. 
B)  Excise tax. 
C)  Income tax. 
D)  Real estate property tax. 
E)  Sales tax. 
A)  Estate tax. 
B)  Excise tax. 
C)  Income tax. 
D)  Real estate property tax. 
E)  Sales tax.

Question 17

The rate used to calculate the tax due on the next dollar of income is referred to as the

Accepted Answer

A)  AMT. 
B)  Average tax rate. 
C)  Income tax rate. 
D)  Marginal tax rate. 
E)  Total tax rate. 
A)  AMT. 
B)  Average tax rate. 
C)  Income tax rate. 
D)  Marginal tax rate. 
E)  Total tax rate.

Question 18

Evan is not concerned about immediate tax benefits but instead wants his investment to grow in value on a tax-free basis. Which of these would be the best for him to invest in today?

Accepted Answer

A)  Municipal bonds 
B)  A tax-deferred annuity 
C)  A Section 529 savings plan 
D)  A 401(k) plan 
E)  A Roth IRA 
A)  Municipal bonds 
B)  A tax-deferred annuity 
C)  A Section 529 savings plan 
D)  A 401(k) plan 
E)  A Roth IRA

Question 19

One of the best tax shelters is owning a car.

Accepted Answer

A) True 
 B)False

Question 20

Every taxpayer receives at least the standard deduction, a set amount on which no taxes are paid.

Accepted Answer

A) True 
 B)False

Which of the following is NOT a tax that most people pay?

A tax due on the purchase of gasoline is called a(n)

According to Tax Service Warnings, who is responsible for supplying accurate and complete information for completing a tax return?

George Franklin paid taxes of $4,375 on a taxable income of $32,000. What was his average tax rate?

The amount levied on the value of property bequeathed by a deceased person is

Tax rate schedules list average tax rates.

Which of the following is NOT a valid form for filing federal income taxes?

Federal income tax returns must be filed by April 1 of each year.

Janet is completing her federal income taxes for the year and has identified the amounts listed here. How much can she rightfully deduct? • AGI: $42,000 • Medical and dental expenses: $1,100 • State income taxes: $1,000 • Mortgage interest: $7,000 • Charitable contributions: $1,250

"Tax Freedom Day" represents how long the average person works to pay her or his taxes each year.

When Paul completes his taxes, he can include all of the following as exemptions except

Form 4868 allows a taxpayer to obtain a six-month extension on filing and paying federal taxes without penalty.

The major sections of Form 1040 include all of the following except

Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction?

You may be required to make estimated tax payments if

The tax that is a major source of revenue for local governments is called a(n)

The rate used to calculate the tax due on the next dollar of income is referred to as the

Evan is not concerned about immediate tax benefits but instead wants his investment to grow in value on a tax-free basis. Which of these would be the best for him to invest in today?

One of the best tax shelters is owning a car.

Every taxpayer receives at least the standard deduction, a set amount on which no taxes are paid.

Personal Financial Planning in Action

Money Management Skills

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters

Exam 3: Taxes in Your Financial Plan

Which of the following is NOT a tax that most people pay?

A tax due on the purchase of gasoline is called a(n)

According to Tax Service Warnings, who is responsible for supplying accurate and complete information for completing a tax return?

George Franklin paid taxes of $4,375 on a taxable income of $32,000. What was his average tax rate?

The amount levied on the value of property bequeathed by a deceased person is

Tax rate schedules list average tax rates.

Which of the following is NOT a valid form for filing federal income taxes?

Federal income tax returns must be filed by April 1 of each year.

Janet is completing her federal income taxes for the year and has identified the amounts listed here. How much can she rightfully deduct? • AGI: $42,000 • Medical and dental expenses: $1,100 • State income taxes: $1,000 • Mortgage interest: $7,000 • Charitable contributions: $1,250

"Tax Freedom Day" represents how long the average person works to pay her or his taxes each year.

When Paul completes his taxes, he can include all of the following as exemptions except

Form 4868 allows a taxpayer to obtain a six-month extension on filing and paying federal taxes without penalty.

The major sections of Form 1040 include all of the following except

Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction?

You may be required to make estimated tax payments if

The tax that is a major source of revenue for local governments is called a(n)

The rate used to calculate the tax due on the next dollar of income is referred to as the

Evan is not concerned about immediate tax benefits but instead wants his investment to grow in value on a tax-free basis. Which of these would be the best for him to invest in today?

One of the best tax shelters is owning a car.

Every taxpayer receives at least the standard deduction, a set amount on which no taxes are paid.

Personal Financial Planning in Action

Money Management Skills

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Financial Planning With Life Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters