Question 1

Your average tax rate is your

Accepted Answer

A) adjusted gross income divided by tax withheld. 
B) tax liability divided by gross income. 
C) tax liability divided by taxable income. 
D) taxable income divided by tax withheld. 
E) gross income divided by tax refund. 
A) adjusted gross income divided by tax withheld. 
B) tax liability divided by gross income. 
C) tax liability divided by taxable income. 
D) taxable income divided by tax withheld. 
E) gross income divided by tax refund.

Question 2

A person with a significant amount of investment income would have a high probability of needing to make estimated tax payments.

Accepted Answer

A) True 
 B)False

Question 3

Tax evasion is a legal means to avoid tax liabilities.

Accepted Answer

A) True 
 B)False

Question 4

You made an error when you filed your tax return last year.You can correct this error by filing Form

Accepted Answer

A) 1040ES. 
B) 1040X. 
C) 1040E. 
D) Schedule A. 
E) Schedule D. 
A) 1040ES. 
B) 1040X. 
C) 1040E. 
D) Schedule A. 
E) Schedule D.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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.
-If you are claimed as a dependent on your parents' tax return,you [may also | may not] claim yourself on your tax return.

Accepted Answer

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

Question 7

The Robertsons,a couple with an AGI of $28,500,decided to contribute the maximum amount possible towards their IRAs even though Mr.Robertson had a pension plan at work.He named his wife as beneficiary of the IRA.What is such a tax strategy called?

Accepted Answer

A) tax deferral since he'll have to pay taxes later when he withdraws the money 
B) tax avoidance since he'll never have to pay taxes on the IRA contribution 
C) tax evasion since this is illegal 
D) tax ignorance since he can't deduct the contribution anyway due to his pension plan at work 
E) income shifting to another person in a lower tax bracket 
A) tax deferral since he'll have to pay taxes later when he withdraws the money 
B) tax avoidance since he'll never have to pay taxes on the IRA contribution 
C) tax evasion since this is illegal 
D) tax ignorance since he can't deduct the contribution anyway due to his pension plan at work 
E) income shifting to another person in a lower tax bracket

Question 8

A long-term capital gain is taxed at the same rate as ordinary income.

Accepted Answer

A) True 
 B)False

Question 9

Marginal tax and average tax rate refer to the same thing.

Accepted Answer

A) True 
 B)False

Question 10

Adjustments to income will decrease your taxable income.

Accepted Answer

A) True 
 B)False

Question 11

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.
-Federal income taxation is [progressive | regressive].

Accepted Answer

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

Question 12

You are preparing your own tax return.The least costly source for answering your questions would be

Accepted Answer

A) IRS 800 numbers. 
B) private preparation service. 
C) tax accountant. 
D) tax lawyer. 
E) local post office. 
A) IRS 800 numbers. 
B) private preparation service. 
C) tax accountant. 
D) tax lawyer. 
E) local post office.

Question 13

Opening a traditional IRA would allow you to defer taxes on the earnings.

Accepted Answer

A) True 
 B)False

Question 14

All taxpayers have an equal probability of having their tax returns audited.

Accepted Answer

A) True 
 B)False

Question 15

Portfolio-related expenses can be written off against passive income.

Accepted Answer

A) True 
 B)False

Question 16

If you have any earned income,you are required to file a tax return.

Accepted Answer

A) True 
 B)False

Question 17

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.
-The major source of revenue for the federal government is [income | estate] taxes.

Accepted Answer

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

Question 18

The federal government gets the majority of its revenue from the ____ tax.

Accepted Answer

A) sales 
B) property 
C) excise 
D) income 
E) estate 
A) sales 
B) property 
C) excise 
D) income 
E) estate

Question 19

Which of the following is not one of the three basic categories for individual income?

Accepted Answer

A) active income 
B) passive income 
C) gross income 
D) portfolio income 
A) active income 
B) passive income 
C) gross income 
D) portfolio income

Question 20

The standard deduction is a blanket deduction that depends on the taxpayers

Accepted Answer

A) filing status 
B) age 
C) vision 
D) all of the above. 
A) filing status 
B) age 
C) vision 
D) all of the above.

Your average tax rate is your

A person with a significant amount of investment income would have a high probability of needing to make estimated tax payments.

Tax evasion is a legal means to avoid tax liabilities.

You made an error when you filed your tax return last year.You can correct this error by filing Form

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

The Robertsons,a couple with an AGI of $28,500,decided to contribute the maximum amount possible towards their IRAs even though Mr.Robertson had a pension plan at work.He named his wife as beneficiary of the IRA.What is such a tax strategy called?

A long-term capital gain is taxed at the same rate as ordinary income.

Marginal tax and average tax rate refer to the same thing.

Adjustments to income will decrease your taxable income.

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. -Federal income taxation is [progressive | regressive].

You are preparing your own tax return.The least costly source for answering your questions would be

Opening a traditional IRA would allow you to defer taxes on the earnings.

All taxpayers have an equal probability of having their tax returns audited.

Portfolio-related expenses can be written off against passive income.

If you have any earned income,you are required to file a tax return.

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. -The major source of revenue for the federal government is [income | estate] taxes.

The federal government gets the majority of its revenue from the ____ tax.

Which of the following is not one of the three basic categories for individual income?

The standard deduction is a blanket deduction that depends on the taxpayers

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

Your average tax rate is your

A person with a significant amount of investment income would have a high probability of needing to make estimated tax payments.

Tax evasion is a legal means to avoid tax liabilities.

You made an error when you filed your tax return last year.You can correct this error by filing Form

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

The Robertsons,a couple with an AGI of $28,500,decided to contribute the maximum amount possible towards their IRAs even though Mr.Robertson had a pension plan at work.He named his wife as beneficiary of the IRA.What is such a tax strategy called?

A long-term capital gain is taxed at the same rate as ordinary income.

Marginal tax and average tax rate refer to the same thing.

Adjustments to income will decrease your taxable income.

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. -Federal income taxation is [progressive | regressive].

You are preparing your own tax return.The least costly source for answering your questions would be

Opening a traditional IRA would allow you to defer taxes on the earnings.

All taxpayers have an equal probability of having their tax returns audited.

Portfolio-related expenses can be written off against passive income.

If you have any earned income,you are required to file a tax return.

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. -The major source of revenue for the federal government is [income | estate] taxes.

The federal government gets the majority of its revenue from the ____ tax.

Which of the following is not one of the three basic categories for individual income?

The standard deduction is a blanket deduction that depends on the taxpayers

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