Exam 3: Preparing Your Taxes

The alternative minimum tax is designed to ensure that individuals with many deductions and tax-shelter investments are paying their fair share of taxes.

____ would not be considered taxable income.

The personal exemption for a student can be taken both by the parent and by the child.

Lori and Ajay are married taxpayers in the 33% marginal tax bracket.In 2014,they sold common stock shares for a long-term capital gain of $3,800.They also sold some technology stock for a long-term capital loss of $9,000.In addition,they sold the home they had lived in for the past 10 years and experienced a $75,000 gain on the house.How much will their net capital gains (or losses)be for 2014?

The regular income tax filing deadline is April 1 of each year.

Henry is married to Lillian,and they have two dependent children.Henry can legally file using which of the following filing statuses?

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. -Qualified dividends are taxed at the same rates as [earned income | long-term capital gains].

Molly and Jason were married.Their only "dependent" was Spot,their black standard poodle.Jason died in 2013.Assuming she does not remarry,in 2014 the only legal filing status for Molly would be

Hector is a single taxpayer in the 28% marginal tax bracket.In 2014,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 2014? How much will he pay (or save)in taxes as a result of these transactions?

To receive the most favorable capital gains treatment,a taxpayer must own and occupy a home for at least two of the five years prior to its sale.

Income tax refunds are automatically sent to those who qualify for refunds no later than April 15.

If you are eligible to receive a tax refund,you will have to file a tax return to get the refund.

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 your gross earnings are less than $15,000,you likely pay more in [federal income tax | social security taxes].

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 common name for Federal Insurance Contribution Act payments is [income taxes | social security].

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

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. -Earnings from real estate investments are an example of [active | passive] income.

If your AGI is less than $100,000 and you do not itemize deductions,the IRS will compute your taxes for you.

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 tax filing status [would | would not] be a factor in determining the amount of standard deduction you could take.

Jose has the following expenses that he wants to include as itemized deductions for the year.His adjusted gross income is $60,000.What is the total itemized deduction he can take? (Show all work.) Medical expenses \ 4,500 Home mortgage interest 8,000 Credit card interest 450 Charitable contributions 1,500 State property taxes 2,400 Job-related expenses 1,900

The federal income tax is