Exam 3: Preparing Your Taxes

For those under the age of 65,medical and dental expenses may be included as itemized deductions:

You have no employer provided pension plan; your IRA contributions are treated as:

Ben and Jack both earned $60,000 this year.Ben (age 30)is married with two children,and Jack (age 68)is single with no dependents.Which of the following is true regarding the amount of Social Security taxes they will pay?

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 21,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 if he is a full time college student.

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. -[Both you and your employer | Only your employer] will make social security contributions based on your wages.

When a child qualifies as a dependent on her parent's return,the child cannot take a personal exemption for herself.

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].

From the information given below,determine Steve's gross income for tax purposes:

One's average tax rate is typically lower than or equal to one's marginal 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. -Major software providers have online versions for preparing federal taxes which is [free to all tax filers | free to qualified tax filers].

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 matching Social Security contributions,employers pay [the same | a lesser] amount of Social Security taxes as/than the employee.

Maria and Ed just sold their home of 20 years so that they could purchase a smaller home.They realized a $400,000 capital gain on the home.How much of this gain will Maria and Ed have to pay taxes on?

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. -[All | Some] of your medical expenses during the year could be taken as an itemized deduction.

A capital gain with a holding period of less than 12 months would be taxed at the same rate as your ordinary income.

Estimated tax payments are made by those who have income from sources other than wages or salaries.

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

Mr.and Mrs.Sanborn,aged 49 and 47 respectively,have had several medical problems this year.Their financial matters for 2013 are as follows: How much would the Sanborns' medical expenses contribute to their total itemized deductions?

Tax credits reduce your:

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.

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 standard or itemized deduction,reduces the taxpayer's [taxable income | taxes due].