Question 1

Fees, tips, and bonuses are forms of

Accepted Answer

A)  Passive income. 
B)  Earned income. 
C)  Exclusions from income. 
D)  Tax-deferred income. 
E)  Tax-exempt income. 
A)  Passive income. 
B)  Earned income. 
C)  Exclusions from income. 
D)  Tax-deferred income. 
E)  Tax-exempt income.

Question 2

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.

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 3

Interest paid on a home equity loan is not deductible.

Accepted Answer

A) True 
 B)False

Question 4

Annie was required to clarify or document minor questions about her tax form by a mail inquiry. She participated in a(n)

Accepted Answer

A)  Correspondence audit. 
B)  Office audit. 
C)  Home audit. 
D)  Field audit. 
E)  Detailed audit. 
A)  Correspondence audit. 
B)  Office audit. 
C)  Home audit. 
D)  Field audit. 
E)  Detailed audit.

Question 5

The itemized deduction allowed for an individual 65 and older is higher than the itemized deduction for a younger taxpayer.

Accepted Answer

A) True 
 B)False

Question 6

Income that is taxed at a later date is

Accepted Answer

A)  Adjusted gross income. 
B)  Earned income. 
C)  Exclusions from income. 
D)  Tax-deferred income. 
E)  Tax-exempt income. 
A)  Adjusted gross income. 
B)  Earned income. 
C)  Exclusions from income. 
D)  Tax-deferred income. 
E)  Tax-exempt income.

Question 7

An advantage of investing in a 401(k) plan is the

Accepted Answer

A)  Ability to invest up to 25% of your annual income. 
B)  Opportunity to save $25,000 per year. 
C)  Possibility of receiving an employer match on your contributions. 
D)  Ability to pay taxes on distributions. 
E)  Ability to withdraw contributions before age 55 without penalty. 
A)  Ability to invest up to 25% of your annual income. 
B)  Opportunity to save $25,000 per year. 
C)  Possibility of receiving an employer match on your contributions. 
D)  Ability to pay taxes on distributions. 
E)  Ability to withdraw contributions before age 55 without penalty.

Question 8

When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 9

Connie thinks that her salary and tax rate for next year will be lower than for this year. What step should she take to minimize her taxes in the current year?

Accepted Answer

A)  Accelerate receipt of income. 
B)  Delay deductions. 
C)  Practice tax evasion. 
D)  Accelerate deductions. 
E)  None of these will allow her to minimize her taxes. 
A)  Accelerate receipt of income. 
B)  Delay deductions. 
C)  Practice tax evasion. 
D)  Accelerate deductions. 
E)  None of these will allow her to minimize her taxes.

Question 10

Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?

Accepted Answer

A)  Add his tax-exempt income. 
B)  Subtract his itemized deductions. 
C)  Add his tax credits. 
D)  Subtract his tax-exempt income. 
E)  Add his tax exemptions. 
A)  Add his tax-exempt income. 
B)  Subtract his itemized deductions. 
C)  Add his tax credits. 
D)  Subtract his tax-exempt income. 
E)  Add his tax exemptions.

Question 11

A person with taxable income of $40,000 and a total tax bill of $4,200 would have an average tax rate of 15%.

Accepted Answer

A) True 
 B)False

Question 12

When calculating federal income taxes, what increases "gross income"?

Accepted Answer

A)  Exclusions 
B)  Tax-exempt income 
C)  Tax-deferred income 
D)  Alimony received 
E)  Tax deductions 
A)  Exclusions 
B)  Tax-exempt income 
C)  Tax-deferred income 
D)  Alimony received 
E)  Tax deductions

Question 13

One of the most frequent filing errors is signing the return.

Accepted Answer

A) True 
 B)False

Question 14

Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?

Accepted Answer

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

Question 15

An example of an excise tax is Social Security.

Accepted Answer

A) True 
 B)False

Question 16

Using the following table, calculate the taxes for an individual with taxable income of $45,000. $$\begin{array} { l r } 
10 \% & \text { Up to } \$ 8,500 \
15 \% & \$ 8,500 - \$ 34,500 \
25 \% & \$ 34,500 - \$ 83,600 \
28 \% & \$ 83,600 - \$ 174,400 \
33 \% & \$ 174,400 - \$ 379,150 \
35 \% & \text { Over } \$ 379,150
\end{array}$$

Accepted Answer

A)  $6,025 
B)  $7,375 
C)  $8,625 
D)  $20,900 
E)  $45,000. 
A)  $6,025 
B)  $7,375 
C)  $8,625 
D)  $20,900 
E)  $45,000.

Question 17

Taxes on earnings that fund old age, survivor, and disability insurance benefits are called

Accepted Answer

A)  Estate taxes. 
B)  Excise taxes. 
C)  Social Security taxes. 
D)  Real estate property taxes. 
E)  Sales taxes. 
A)  Estate taxes. 
B)  Excise taxes. 
C)  Social Security taxes. 
D)  Real estate property taxes. 
E)  Sales taxes.

Question 18

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?

Accepted Answer

A)  Single 
B)  Married, filing a joint return 
C)  Head of household 
D)  Qualifying widow or widower 
E)  Married, but filing individually 
A)  Single 
B)  Married, filing a joint return 
C)  Head of household 
D)  Qualifying widow or widower 
E)  Married, but filing individually

Question 19

Amounts given for tuition payments or medical expenses are not subject to gift taxes.

Accepted Answer

A) True 
 B)False

Question 20

The maximum that an individual can contribute to a Coverdell Education Savings Account each year is

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $5,000. 
E)  $15,500. 
A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $5,000. 
E)  $15,500.

Fees, tips, and bonuses are forms of

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.

Interest paid on a home equity loan is not deductible.

Annie was required to clarify or document minor questions about her tax form by a mail inquiry. She participated in a(n)

The itemized deduction allowed for an individual 65 and older is higher than the itemized deduction for a younger taxpayer.

Income that is taxed at a later date is

An advantage of investing in a 401(k) plan is the

When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.

Connie thinks that her salary and tax rate for next year will be lower than for this year. What step should she take to minimize her taxes in the current year?

Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?

A person with taxable income of $40,000 and a total tax bill of $4,200 would have an average tax rate of 15%.

When calculating federal income taxes, what increases "gross income"?

One of the most frequent filing errors is signing the return.

Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?

An example of an excise tax is Social Security.

Using the following table, calculate the taxes for an individual with taxable income of $45,000. 10\% Up to \ 8,500 15\% \ 8,500-\ 34,500 25\% \ 34,500-\ 83,600 28\% \ 83,600-\ 174,400 33\% \ 174,400-\ 379,150 35\% Over \ 379,150

Taxes on earnings that fund old age, survivor, and disability insurance benefits are called

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?

Amounts given for tuition payments or medical expenses are not subject to gift taxes.

The maximum that an individual can contribute to a Coverdell Education Savings Account each year is

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

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Exam 3: Taxes in Your Financial Plan

Fees, tips, and bonuses are forms of

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.

Interest paid on a home equity loan is not deductible.

Annie was required to clarify or document minor questions about her tax form by a mail inquiry. She participated in a(n)

The itemized deduction allowed for an individual 65 and older is higher than the itemized deduction for a younger taxpayer.

Income that is taxed at a later date is

An advantage of investing in a 401(k) plan is the

When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.

Connie thinks that her salary and tax rate for next year will be lower than for this year. What step should she take to minimize her taxes in the current year?

Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?

A person with taxable income of $40,000 and a total tax bill of $4,200 would have an average tax rate of 15%.

When calculating federal income taxes, what increases "gross income"?

One of the most frequent filing errors is signing the return.

Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?

An example of an excise tax is Social Security.

Using the following table, calculate the taxes for an individual with taxable income of $45,000. 10\% Up to \ 8,500 15\% \ 8,500-\ 34,500 25\% \ 34,500-\ 83,600 28\% \ 83,600-\ 174,400 33\% \ 174,400-\ 379,150 35\% Over \ 379,150

Taxes on earnings that fund old age, survivor, and disability insurance benefits are called

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?

Amounts given for tuition payments or medical expenses are not subject to gift taxes.

The maximum that an individual can contribute to a Coverdell Education Savings Account each year is

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