Question 1

Congress considers tax law changes throughout the year.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

From the information given below,determine Rosie's gross income for tax purposes:
 $$\begin{array} { l r } 
\text { Salary } & \$ 40,000 \
\text { Interest (checking account) } & 50 \
\text { Cash received as birthday gift } & 900 \
\text { Dividends (mutual funds) } & 500 \
\text { Inheritance received on father's death } & 22,000 \
\text { Cash received from insurance for accident claim settlement } & 3,200 \
\text { Cash dividend from stock } & 750
\end{array}$$

Accepted Answer

$40,000 + 50 + 500 + 750 = $41,300

Question 4

An investment must be owned over two years in order to qualify for long-term capital gains treatment.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Municipal bond investments typically provide tax-free interest income.

Accepted Answer

A) True 
 B)False

Question 7

To qualify for the capital gain exclusion on a home sale,the seller must have resided in the residence for ___ of the previous 5 years.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
E) 5 
A) 1 
B) 2 
C) 3 
D) 4 
E) 5

Question 8

A progressive tax system is one in which higher-income people pay ____ than lower-income people.

Accepted Answer

A) a higher dollar amount in taxes 
B) tax at a higher rate 
C) a lower dollar amount in taxes 
D) tax at a lower rate 
E) tax at the same rate 
A) a higher dollar amount in taxes 
B) tax at a higher rate 
C) a lower dollar amount in taxes 
D) tax at a lower rate 
E) tax at the same rate

Question 9

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-Your income tax filing status is determined primarily by your [economic | family] situation.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 10

A ____ would be most likely to have to pay estimated taxes.

Accepted Answer

A) school teacher 
B) manager for a major industrial firm 
C) self-employed plumber 
D) union worker 
E) corporate attorney 
A) school teacher 
B) manager for a major industrial firm 
C) self-employed plumber 
D) union worker 
E) corporate attorney

Question 11

Gifts received from family and friends are included in gross income.

Accepted Answer

A) True 
 B)False

Question 12

The federal personal income tax is a flat tax.

Accepted Answer

A) True 
 B)False

Question 13

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-You are age 30 and single with no dependents.You take the standard deduction.Based on this information,you [could | could not] use the 1040EZ.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 14

Itemized deductions could include certain taxes,medical expenditures,and home mortgage interest.

Accepted Answer

A) True 
 B)False

Question 15

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
-When one gives a child an income-producing asset,one is [maximizing their deductions | income shifting].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 16

Social security taxes are deducted from all wages and salaries earned in a year.

Accepted Answer

A) True 
 B)False

Question 17

____ income is subject to federal taxes.

Accepted Answer

A) Gross 
B) Adjusted gross 
C) Net 
D) Take-home 
E) Taxable 
A) Gross 
B) Adjusted gross 
C) Net 
D) Take-home 
E) Taxable

Question 18

Federal income taxes paid can be deducted the following year.

Accepted Answer

A) True 
 B)False

Question 19

The tax rate on capital gains for most people is

Accepted Answer

A) the same as on regular income. 
B) dependent on the time the asset was owned. 
C) dependent on the amount of profit earned. 
D) higher than the rate on regular income. 
E) none of these. 
A) the same as on regular income. 
B) dependent on the time the asset was owned. 
C) dependent on the amount of profit earned. 
D) higher than the rate on regular income. 
E) none of these.

Question 20

One's average tax rate is typically lower than one's marginal tax rate.

Accepted Answer

A) True 
 B)False

Congress considers tax law changes throughout the year.

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

An investment must be owned over two years in order to qualify for long-term capital gains treatment.

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

Municipal bond investments typically provide tax-free interest income.

To qualify for the capital gain exclusion on a home sale,the seller must have resided in the residence for ___ of the previous 5 years.

A progressive tax system is one in which higher-income people pay ____ than lower-income people.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Your income tax filing status is determined primarily by your [economic | family] situation.

A ____ would be most likely to have to pay estimated taxes.

Gifts received from family and friends are included in gross income.

The federal personal income tax is a flat tax.

Itemized deductions could include certain taxes,medical expenditures,and home mortgage interest.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -When one gives a child an income-producing asset,one is [maximizing their deductions | income shifting].

Social security taxes are deducted from all wages and salaries earned in a year.

____ income is subject to federal taxes.

Federal income taxes paid can be deducted the following year.

The tax rate on capital gains for most people is

One's average tax rate is typically lower than one's marginal tax rate.

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

Congress considers tax law changes throughout the year.

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

An investment must be owned over two years in order to qualify for long-term capital gains treatment.

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

Municipal bond investments typically provide tax-free interest income.

To qualify for the capital gain exclusion on a home sale,the seller must have resided in the residence for ___ of the previous 5 years.

A progressive tax system is one in which higher-income people pay ____ than lower-income people.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Your income tax filing status is determined primarily by your [economic | family] situation.

A ____ would be most likely to have to pay estimated taxes.

Gifts received from family and friends are included in gross income.

The federal personal income tax is a flat tax.

Itemized deductions could include certain taxes,medical expenditures,and home mortgage interest.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -When one gives a child an income-producing asset,one is [maximizing their deductions | income shifting].

Social security taxes are deducted from all wages and salaries earned in a year.

____ income is subject to federal taxes.

Federal income taxes paid can be deducted the following year.

The tax rate on capital gains for most people is

One's average tax rate is typically lower than one's marginal tax rate.

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