Question 1

Tax-deferred income is better than tax-free income.

Accepted Answer

A) True 
 B)False  False

Question 2

Tax avoidance is a legal means to minimize tax liabilities.

Accepted Answer

A) True 
 B)False  True

Question 3

On which of the following types of income would you normally have income tax withheld?

Accepted Answer

A)  Tips 
B)  Interest 
C)  Dividends 
D)  Capital gains 
E)  Self-employment income 
A)  Tips 
B)  Interest 
C)  Dividends 
D)  Capital gains 
E)  Self-employment income A

Question 4

Mandi and Thomas were married and had one child,age 7.Mandi died in 2011 leaving Thomas a single parent.In 2012,the most favorable filing status for Thomas will be

Accepted Answer

A)  single 
B)  married filing separately 
C)  head of household 
D)  qualifying widow 
E)  any of the above 
A)  single 
B)  married filing separately 
C)  head of household 
D)  qualifying widow 
E)  any of the above

Question 5

Tax avoidance is legal,tax evasion is illegal.

Accepted Answer

A) True 
 B)False

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A special tax provision reduced the social security portion for the individual taxpayer by [1% | 2%] in 2011 and 2012.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-You will itemize your deductions.You [could | could not] use the 1040A.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-There is a [high | low] chance that one's tax return will be audited in a given year.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Excise taxes are similar to [real estate | sales] taxes.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 10

Hector is a single taxpayer in the 28% marginal tax bracket.In 2011,he sold stock shares for a long-term capital gain of $8,500.He also sold some financial services stock for a long-term capital loss of $2,000.In addition,he sold the home that he had lived in for the past 3 years and experienced a $15,000 gain on the house.How much will his net capital gains (or losses)be for 2011? How much will he pay (or save)in taxes as a result of these transactions?

Accepted Answer

$6,500 long-term capital gain

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The higher your income,the [greater | smaller] the probability you will be audited.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 12

Connie is a 20 year old college student who earned $8,000 and spent it all on her support during the year.Her parents may claim her as a tax dependent as long as

Accepted Answer

A)  they contribute more than half her support for the year. 
B)  she is under 21. 
C)  she makes under $10,000. 
D)  she lives at home. 
E)  all these things are true. 
A)  they contribute more than half her support for the year. 
B)  she is under 21. 
C)  she makes under $10,000. 
D)  she lives at home. 
E)  all these things are true.

Question 13

____ would not be considered taxable income.

Accepted Answer

A)  Child support payments 
B)  Proceedings from an employer retirement plan 
C)  Dividend income 
D)  a and b 
E)  a,b,and c 
A)  Child support payments 
B)  Proceedings from an employer retirement plan 
C)  Dividend income 
D)  a and b 
E)  a,b,and c

Question 14

If you do not wish to itemize deductions,you can use the

Accepted Answer

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

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The common name for Federal Insurance Contribution Act payments is [income taxes | social security].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 16

The Federal personal income tax is a flat tax.

Accepted Answer

A) True 
 B)False

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Christy lives by herself with her dog,Tex.She [can | cannot] use the Head of Household filing status.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 18

You purchased and lived in your home 8 years.Now you have received an excellent promotion,but you will have to sell your home and move to another community.The capital gains on the home sold will

Accepted Answer

A)  be taxable as ordinary income. 
B)  be taxable at the 15% tax bracket. 
C)  be taxable at the appropriate long-term capital gains rate. 
D)  not be taxable because the home was your principal residence. 
E)  not be taxable because this is a job-related move. 
A)  be taxable as ordinary income. 
B)  be taxable at the 15% tax bracket. 
C)  be taxable at the appropriate long-term capital gains rate. 
D)  not be taxable because the home was your principal residence. 
E)  not be taxable because this is a job-related move.

Question 19

Opening a traditional IRA would allow you to take advantage of tax free earnings.

Accepted Answer

A) True 
 B)False

Question 20

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-My son,age 21,earned $5,000 last year.He still lives at home,and I provide over 50% of his support.I [can | cannot] claim him as a dependent on my tax return if he is a full time college student.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement. 
A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Tax-deferred income is better than tax-free income.

Tax avoidance is a legal means to minimize tax liabilities.

On which of the following types of income would you normally have income tax withheld?

Mandi and Thomas were married and had one child,age 7.Mandi died in 2011 leaving Thomas a single parent.In 2012,the most favorable filing status for Thomas will be

Tax avoidance is legal,tax evasion is illegal.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A special tax provision reduced the social security portion for the individual taxpayer by [1% | 2%] in 2011 and 2012.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -You will itemize your deductions.You [could | could not] use the 1040A.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -There is a [high | low] chance that one's tax return will be audited in a given year.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Excise taxes are similar to [real estate | sales] taxes.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The higher your income,the [greater | smaller] the probability you will be audited.

Connie is a 20 year old college student who earned $8,000 and spent it all on her support during the year.Her parents may claim her as a tax dependent as long as

____ would not be considered taxable income.

If you do not wish to itemize deductions,you can use the

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The common name for Federal Insurance Contribution Act payments is [income taxes | social security].

The Federal personal income tax is a flat tax.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Christy lives by herself with her dog,Tex.She [can | cannot] use the Head of Household filing status.

You purchased and lived in your home 8 years.Now you have received an excellent promotion,but you will have to sell your home and move to another community.The capital gains on the home sold will

Opening a traditional IRA would allow you to take advantage of tax free earnings.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -My son,age 21,earned $5,000 last year.He still lives at home,and I provide over 50% of his support.I [can | cannot] claim him as a dependent on my tax return if he is a full time college student.

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

Planning for Retirement

Preserving Your Estate

Filters

Exam 3: Preparing Your Taxes

Tax-deferred income is better than tax-free income.

Tax avoidance is a legal means to minimize tax liabilities.

On which of the following types of income would you normally have income tax withheld?

Mandi and Thomas were married and had one child,age 7.Mandi died in 2011 leaving Thomas a single parent.In 2012,the most favorable filing status for Thomas will be

Tax avoidance is legal,tax evasion is illegal.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A special tax provision reduced the social security portion for the individual taxpayer by [1% | 2%] in 2011 and 2012.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -You will itemize your deductions.You [could | could not] use the 1040A.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -There is a [high | low] chance that one's tax return will be audited in a given year.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Excise taxes are similar to [real estate | sales] taxes.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The higher your income,the [greater | smaller] the probability you will be audited.

Connie is a 20 year old college student who earned $8,000 and spent it all on her support during the year.Her parents may claim her as a tax dependent as long as

____ would not be considered taxable income.

If you do not wish to itemize deductions,you can use the

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The common name for Federal Insurance Contribution Act payments is [income taxes | social security].

The Federal personal income tax is a flat tax.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Christy lives by herself with her dog,Tex.She [can | cannot] use the Head of Household filing status.

You purchased and lived in your home 8 years.Now you have received an excellent promotion,but you will have to sell your home and move to another community.The capital gains on the home sold will

Opening a traditional IRA would allow you to take advantage of tax free earnings.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -My son,age 21,earned $5,000 last year.He still lives at home,and I provide over 50% of his support.I [can | cannot] claim him as a dependent on my tax return if he is a full time college student.

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

Planning for Retirement

Preserving Your Estate

Filters