Exam 3: Preparing Your 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. -Your marital status [will | will not] have an effect on the amount of social security tax you pay.

Tax avoidance is a legal means to minimize tax liabilities.

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

Your income tax withholding is dependent on:

Sue and Tim are married taxpayers in the 33% marginal tax bracket.In 2013,they sold common stock shares (which they held for more than 40 months)for a 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 2013? How much will they pay (or save)in taxes as a result of these transactions?

Residential mortgage interest and property taxes paid are both deductible items.

The sale of your home will rarely result in a taxable capital gain.

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.

Social security taxes are paid on earned income but not on investment income.

John and Charlotte are considering contributing $1,000 to their church.This contribution will bring their total itemized deductions to $2,000.Assuming they are in the 15% marginal tax bracket,how much will they save in taxes by contributing this $1,000 to their church?

Persons who work for more than one employer in any year will owe more Social Security taxes than if all their income was earned from a single employer.

The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay.

_____ income is gross income less tax deductions and payments for insurance and retirement savings.

Which of the following state and local taxes are deductible on federal income taxes for those that itemize deductions?

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 highest marginal tax rate is currently [39.6% | 35%].

Jackson is a 25 year old college student whose parents contribute to his support.His parents may claim him as a tax dependent in 2013 as long as:

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 pay a professional to prepare your taxes,any errors on the return will be [your | the preparer's] responsibility.

The Robertsons,a couple with an adjusted gross income 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?

Shawn earned $65,000.If the total Social Security tax rate is 15.3% then how much was his social security tax? How much would his employer pay in social security taxes for Shawn?

Which of the following is a legal method of reducing your current tax liability?