Question 1

There is no Social Security tax on income beyond a certain level.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not a legitimate itemized deduction?

Accepted Answer

A)  Mortgage interest expense 
B)  Real estate tax 
C)  Interest paid on credit cards 
D)  State income tax 
A)  Mortgage interest expense 
B)  Real estate tax 
C)  Interest paid on credit cards 
D)  State income tax

Question 3

For qualified individuals,a contribution to a traditional IRA (Individual Retirement Account)is a(n)

Accepted Answer

A)  credit. 
B)  adjustment to gross income. 
C)  itemized expense. 
D)  additional exemption amount. 
A)  credit. 
B)  adjustment to gross income. 
C)  itemized expense. 
D)  additional exemption amount.

Question 4

To qualify for "head of household" you must

Accepted Answer

A)  be single. 
B)  have at least one dependent in your household. 
C)  be a homeowner. 
D)  Both A and B are correct. 
A)  be single. 
B)  have at least one dependent in your household. 
C)  be a homeowner. 
D)  Both A and B are correct.

Question 5

An earned income credit is a special credit that reduces the amount of taxes owed by taxpayers who earn high incomes.

Accepted Answer

A) True 
 B)False

Question 6

If a stock was purchased in January 2014 for $1,000 and sold in December 2015 for $3,000,a ________ of $2,000 results.

Accepted Answer

A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss 
A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss

Question 7

If you are married with two children and your two elderly parents live with you in an "in-law" suite,but pay a nominal rent monthly,you should file as

Accepted Answer

A)  married filing separately. 
B)  married filing jointly with 4 total personal exemptions. 
C)  married filing jointly with 6 total personal exemptions. 
D)  married filing jointly with parents. 
A)  married filing separately. 
B)  married filing jointly with 4 total personal exemptions. 
C)  married filing jointly with 6 total personal exemptions. 
D)  married filing jointly with parents.

Question 8

The knowledge of tax laws can help you

Accepted Answer

A)  conserve your income. 
B)  enhance your investments. 
C)  protect the transfer of your wealth at your death. 
D)  All of the above. 
A)  conserve your income. 
B)  enhance your investments. 
C)  protect the transfer of your wealth at your death. 
D)  All of the above.

Question 9

If you are a surviving spouse,you may continue to use the married filing jointly tax rates unless

Accepted Answer

A)  you are divorced and your ex-spouse died in the last five years. 
B)  your spouse died in the last two years. 
C)  you have children you can claim as an exemption. 
D)  you pay more than half the cost of maintaining your residence. 
A)  you are divorced and your ex-spouse died in the last five years. 
B)  your spouse died in the last two years. 
C)  you have children you can claim as an exemption. 
D)  you pay more than half the cost of maintaining your residence.

Question 10

The Tax Relief Act of 2001 provided educational incentives to a broad range of taxpayers and reduced contribution limits to retirement plans.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following items is not impacted by the taxpayer's income level?

Accepted Answer

A)  Amount withheld for Social Security 
B)  Amount withheld for Medicare taxes 
C)  College expense credits 
D)  Personal exemptions 
A)  Amount withheld for Social Security 
B)  Amount withheld for Medicare taxes 
C)  College expense credits 
D)  Personal exemptions

Question 12

The tax method that uses the principle of taxing those more who earn more is called ________ taxation.

Accepted Answer

A)  benefits received 
B)  payment burden 
C)  progressive 
D)  regressive 
A)  benefits received 
B)  payment burden 
C)  progressive 
D)  regressive

Question 13

Under the Tax Relief Act of 2003,the lowest tax bracket for single taxpayers earning $8,000 or less is 15 percent.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following conditions will not afford you a tax advantage?

Accepted Answer

A)  Being over age 65 
B)  Being deaf 
C)  Being widowed within the past two years 
D)  Being blind 
A)  Being over age 65 
B)  Being deaf 
C)  Being widowed within the past two years 
D)  Being blind

Question 15

List your income,deductions,adjusted gross income,number of exemptions at $3,000 each,and itemized deductions or a standard deduction of $5,000 to arrive at taxable income.If you would like,make up an example if you don't want to supply your own figures.Justify the number of exemptions.

Accepted Answer

Income less deductions gives a

Question 16

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

Accepted Answer

A) True 
 B)False

Question 17

The key tax planning decisions in building your financial plan are knowing what tax savings are currently available to you and how you can increase your tax savings in the future.

Accepted Answer

A) True 
 B)False

Question 18

A branch of the U.S.Treasury Department,called the ________,administers the federal tax system.

Accepted Answer

A)  U.S. Department of Tax 
B)  Internal Revenue Service 
C)  U.S. Tax Authority 
D)  U.S. Department of Collection 
A)  U.S. Department of Tax 
B)  Internal Revenue Service 
C)  U.S. Tax Authority 
D)  U.S. Department of Collection

Question 19

When you own a house as a primary residence,

Accepted Answer

A)  it is always best to itemize deductions on your tax return. 
B)  your property taxes are not deductible. 
C)  you get a straight $5,000 deduction. 
D)  interest and taxes may increase your allowable deductions to the point where it is beneficial to itemize them. 
A)  it is always best to itemize deductions on your tax return. 
B)  your property taxes are not deductible. 
C)  you get a straight $5,000 deduction. 
D)  interest and taxes may increase your allowable deductions to the point where it is beneficial to itemize them.

Question 20

All taxpayers have a large degree of freedom in choosing their filing status.

Accepted Answer

A) True 
 B)False

Exam 4: Using Tax Concepts for Planning

There is no Social Security tax on income beyond a certain level.

Which of the following is not a legitimate itemized deduction?

For qualified individuals,a contribution to a traditional IRA (Individual Retirement Account)is a(n)

To qualify for "head of household" you must

An earned income credit is a special credit that reduces the amount of taxes owed by taxpayers who earn high incomes.

If a stock was purchased in January 2014 for $1,000 and sold in December 2015 for $3,000,a ________ of $2,000 results.

If you are married with two children and your two elderly parents live with you in an "in-law" suite,but pay a nominal rent monthly,you should file as

The knowledge of tax laws can help you

If you are a surviving spouse,you may continue to use the married filing jointly tax rates unless

The Tax Relief Act of 2001 provided educational incentives to a broad range of taxpayers and reduced contribution limits to retirement plans.

Which of the following items is not impacted by the taxpayer's income level?

The tax method that uses the principle of taxing those more who earn more is called ________ taxation.

Under the Tax Relief Act of 2003,the lowest tax bracket for single taxpayers earning $8,000 or less is 15 percent.

Which of the following conditions will not afford you a tax advantage?

List your income,deductions,adjusted gross income,number of exemptions at $3,000 each,and itemized deductions or a standard deduction of $5,000 to arrive at taxable income.If you would like,make up an example if you don't want to supply your own figures.Justify the number of exemptions.

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

The key tax planning decisions in building your financial plan are knowing what tax savings are currently available to you and how you can increase your tax savings in the future.

A branch of the U.S.Treasury Department,called the ________,administers the federal tax system.

When you own a house as a primary residence,

All taxpayers have a large degree of freedom in choosing their filing status.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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