Exam 3: Preparing Your Taxes

Murray (age 68,single)just sold his home of 35 years so that he could relocate nearer his grandchildren.He realized a $400,000 capital gain on the home.How much of this gain will Murray have to pay taxes on?

Tax evasion is a legal means to avoid tax liabilities.

Income tax refunds are automatically sent to those who qualify for refunds no later than April 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. -Tax [avoidance | evasion] involves failure to accurately report income or deductions,and,in extreme cases,a failure to pay taxes altogether.

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. -[Alimony | Child support] would be reported as taxable income.

George,from the previous problem,is single and his standard deduction for the year is $5,800.If he is in the 25% marginal tax bracket,how much tax would he save by using his itemized deductions?

A capital gain is the result of:

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. -Tax [avoidance | evasion] is a perfectly legal practice.

_____ would not be considered taxable income.

You should itemize deductions when total itemized deductions are less than the standard deduction.

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. -My son,age 26 and a full-time college student,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.

Qualified dividends are taxed at lower capital gains rates.

Qualifying interest on a student loan can be written off as an itemized deduction.

Molly and Justin are considering contributing $5,000 to their favorite,tax deductible charity.This contribution will bring their total itemized deductions to $20,000.Assuming they are in the 28% marginal tax bracket,how much will they save in taxes by contributing this $5,000 to charity?

A tax audit is a(n):

Mandi and Thomas were married and had a child aged 7.Mandi died in 2012 leaving Thomas a single parent.In 2013,the most favorable filing status for Thomas will be:

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 [earned income rates | lower capital gains rates].

A _____ would be most likely to have to pay estimated 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. -If you earn less than $15,000,you likely pay more in [federal income tax | social security taxes].

For tax purposes,head-of-household refers to: