Question 1

________ income is from activities in which the taxpayer does not actively participate.

Accepted Answer

A) Active 
B) Portfolio 
C) Passive 
D) Investment 
E) both C and D 
A) Active 
B) Portfolio 
C) Passive 
D) Investment 
E) both C and D C

Question 2

Wilma Rudolph was given a cost of living raise and a merit raise at work this year.Her federal income taxes will be paid at 25% instead of 15%.Wilma has experienced

Accepted Answer

A) bracket creep. 
B) the inflation trap. 
C) a capital gain. 
D) a higher personal exemption rate. 
E) an opportunity to change her filing status. 
A) bracket creep. 
B) the inflation trap. 
C) a capital gain. 
D) a higher personal exemption rate. 
E) an opportunity to change her filing status. A

Question 3

Richard and Katarina's filing status should be

Accepted Answer

A) head of household. 
B) married filing jointly. 
C) married filing separately. 
D) single. 
E) surviving spouse. 
A) head of household. 
B) married filing jointly. 
C) married filing separately. 
D) single. 
E) surviving spouse. B

Question 4

The Lifetime Learning tax credit is designed to help all taxpayers get at least a two-year degree.

Accepted Answer

A) True 
 B)False

Question 5

A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.

Accepted Answer

A) True 
 B)False

Question 6

Name and describe the four general categories that reduce your taxable income,therefore reducing your tax liability.

Accepted Answer

Adjustments to income allow certain lega

Question 7

The Federal Insurance Contributions Act (FICA)tax deducted from your salary goes to pay for unemployment insurance.

Accepted Answer

A) True 
 B)False

Question 8

The movement into a higher tax bracket as a result of inflation increasing wages is called

Accepted Answer

A) bracket climbing. 
B) bracket migration. 
C) bracket creep. 
D) bracket shifting. 
A) bracket climbing. 
B) bracket migration. 
C) bracket creep. 
D) bracket shifting.

Question 9

Claire currently makes $30,000 per year and is in a 15% tax bracket.If she contributes $1,800 to her 401(k)plan at work,by how much will this lower her tax liability?

Accepted Answer

A) $270 
B) $1,800 
C) $4,500 
D) $4,230 
A) $270 
B) $1,800 
C) $4,500 
D) $4,230

Question 10

Only people in the higher tax brackets pay taxes on capital gains.

Accepted Answer

A) True 
 B)False

Question 11

What is Samuel's total tax liability for 2014?

Accepted Answer

A) $5,351.25 
B) $3,710.25 
C) $4,541.25 
D) $3,948.75 
A) $5,351.25 
B) $3,710.25 
C) $4,541.25 
D) $3,948.75

Question 12

Which of the following statements about portfolio income from investments that are not held in a tax-deferred account,is accurate?

Accepted Answer

A) It is also called investment income. 
B) It is normally in the form of dividends and interest. 
C) It must be reported on your tax return. 
D) It may be taxed at a lower rate than wages and salaries are. 
E) All of the above 
A) It is also called investment income. 
B) It is normally in the form of dividends and interest. 
C) It must be reported on your tax return. 
D) It may be taxed at a lower rate than wages and salaries are. 
E) All of the above

Question 13

The impact of taxes are an important consideration in most of the financial decisions that you will make.

Accepted Answer

A) True 
 B)False

Question 14

For the Taylors,in chapter 4,they are allowed to take a tax credit of $1,000 per dependent child off of their

Accepted Answer

A) total tax owed. 
B) exemptions counted. 
C) adjustments retained. 
D) net income. 
A) total tax owed. 
B) exemptions counted. 
C) adjustments retained. 
D) net income.

Question 15

Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.

Accepted Answer

A) True 
 B)False

Question 16

With a growing family,Karen and Jeffrey know they should start investing more to provide for a secure future.Which of the following issues should they consider as they plan?

Accepted Answer

A) Interest paid on money borrowed to invest is an itemized deduction. 
B) Contributions to tax-deferred retirement accounts avoid taxes in the current year and grow tax-free until the time of withdrawal. 
C) Qualified dividends and capital gains are taxed at a lower rate than ordinary income. 
D) Municipal bond earnings are exempt from federal income tax. 
E) All of the above 
A) Interest paid on money borrowed to invest is an itemized deduction. 
B) Contributions to tax-deferred retirement accounts avoid taxes in the current year and grow tax-free until the time of withdrawal. 
C) Qualified dividends and capital gains are taxed at a lower rate than ordinary income. 
D) Municipal bond earnings are exempt from federal income tax. 
E) All of the above

Question 17

Five years ago,you purchased 200 shares of Go-Tech stock for $25 per share.If you sold those shares today at the current market price of $90 per share,what would be your capital gain on the sale,ignoring all commissions?

Accepted Answer

A) $115 
B) $4,290 
C) $8,710 
D) $13,000 
A) $115 
B) $4,290 
C) $8,710 
D) $13,000

Question 18

Your deductions as a single person have reduced your taxable income to $38,950,bringing you into the 25 percent tax bracket.As such,your taxes will amount to 25 percent of your taxable income of $38,950.

Accepted Answer

A) True 
 B)False

Question 19

Since their taxes are becoming more complex,Jeffrey and Karen are concerned about making a mistake or getting audited.They should

Accepted Answer

A) consult IRS Publication 17,Your Federal Income Tax,the IRS toll-free "hotline," or one of the self-help tax publications to learn more about their tax situation. 
B) choose an independent tax specialist to prepare their taxes,because there is more consistency in their training and the quality for their work than that of nationally affiliated specialists. 
C) remember that the key to winning an audit is good records to verify the tax form information. 
D) Only choices A and C. 
E) All of the above choices. 
A) consult IRS Publication 17,Your Federal Income Tax,the IRS toll-free "hotline," or one of the self-help tax publications to learn more about their tax situation. 
B) choose an independent tax specialist to prepare their taxes,because there is more consistency in their training and the quality for their work than that of nationally affiliated specialists. 
C) remember that the key to winning an audit is good records to verify the tax form information. 
D) Only choices A and C. 
E) All of the above choices.

Question 20

When considering a principal residence as a tax shelter,remember that you can

Accepted Answer

A) purchase a house and deduct the mortgage interest. 
B) maintain and improve your home,as $500,000 of capital gains for couples and $250,000 of capital gains for single filers is exempt from taxation. 
C) take out a home equity loan to pay for other debts,such as auto financing. 
D) use all of these tax-saving strategies. 
E) only A and C. 
A) purchase a house and deduct the mortgage interest. 
B) maintain and improve your home,as $500,000 of capital gains for couples and $250,000 of capital gains for single filers is exempt from taxation. 
C) take out a home equity loan to pay for other debts,such as auto financing. 
D) use all of these tax-saving strategies. 
E) only A and C.

________ income is from activities in which the taxpayer does not actively participate.

Wilma Rudolph was given a cost of living raise and a merit raise at work this year.Her federal income taxes will be paid at 25% instead of 15%.Wilma has experienced

Richard and Katarina's filing status should be

The Lifetime Learning tax credit is designed to help all taxpayers get at least a two-year degree.

A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.

Name and describe the four general categories that reduce your taxable income,therefore reducing your tax liability.

The Federal Insurance Contributions Act (FICA)tax deducted from your salary goes to pay for unemployment insurance.

The movement into a higher tax bracket as a result of inflation increasing wages is called

Claire currently makes $30,000 per year and is in a 15% tax bracket.If she contributes $1,800 to her 401(k)plan at work,by how much will this lower her tax liability?

Only people in the higher tax brackets pay taxes on capital gains.

What is Samuel's total tax liability for 2014?

Which of the following statements about portfolio income from investments that are not held in a tax-deferred account,is accurate?

The impact of taxes are an important consideration in most of the financial decisions that you will make.

For the Taylors,in chapter 4,they are allowed to take a tax credit of $1,000 per dependent child off of their

Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.

With a growing family,Karen and Jeffrey know they should start investing more to provide for a secure future.Which of the following issues should they consider as they plan?

Five years ago,you purchased 200 shares of Go-Tech stock for $25 per share.If you sold those shares today at the current market price of $90 per share,what would be your capital gain on the sale,ignoring all commissions?

Your deductions as a single person have reduced your taxable income to $38,950,bringing you into the 25 percent tax bracket.As such,your taxes will amount to 25 percent of your taxable income of $38,950.

Since their taxes are becoming more complex,Jeffrey and Karen are concerned about making a mistake or getting audited.They should

When considering a principal residence as a tax shelter,remember that you can

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 4: Tax Planning and Strategies

________ income is from activities in which the taxpayer does not actively participate.

Wilma Rudolph was given a cost of living raise and a merit raise at work this year.Her federal income taxes will be paid at 25% instead of 15%.Wilma has experienced

Richard and Katarina's filing status should be

The Lifetime Learning tax credit is designed to help all taxpayers get at least a two-year degree.

A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.

Name and describe the four general categories that reduce your taxable income,therefore reducing your tax liability.

The Federal Insurance Contributions Act (FICA)tax deducted from your salary goes to pay for unemployment insurance.

The movement into a higher tax bracket as a result of inflation increasing wages is called

Claire currently makes $30,000 per year and is in a 15% tax bracket.If she contributes $1,800 to her 401(k)plan at work,by how much will this lower her tax liability?

Only people in the higher tax brackets pay taxes on capital gains.

What is Samuel's total tax liability for 2014?

Which of the following statements about portfolio income from investments that are not held in a tax-deferred account,is accurate?

The impact of taxes are an important consideration in most of the financial decisions that you will make.

For the Taylors,in chapter 4,they are allowed to take a tax credit of $1,000 per dependent child off of their

Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.

With a growing family,Karen and Jeffrey know they should start investing more to provide for a secure future.Which of the following issues should they consider as they plan?

Five years ago,you purchased 200 shares of Go-Tech stock for $25 per share.If you sold those shares today at the current market price of $90 per share,what would be your capital gain on the sale,ignoring all commissions?

Your deductions as a single person have reduced your taxable income to $38,950,bringing you into the 25 percent tax bracket.As such,your taxes will amount to 25 percent of your taxable income of $38,950.

Since their taxes are becoming more complex,Jeffrey and Karen are concerned about making a mistake or getting audited.They should

When considering a principal residence as a tax shelter,remember that you can

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters