Question 1

Currently,the highest tax bracket for taxpayers is 37.5 percent.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following tax planning strategies could Joseph consider to reduce his future tax bills?

Accepted Answer

A) Carefully track and maintain records for all itemized deduction categories to insure he is maximizing his itemized deductions. 
B) Establish a home equity credit line to finance other consumer credit,such as an auto purchase. 
C) Contribute as much as possible to a tax-deferred retirement account,such as his 401(k). 
D) Invest in municipal bonds to receive tax-exempt income. 
E) All of the above would be strategies available to Joseph to reduce his future taxes. 
A) Carefully track and maintain records for all itemized deduction categories to insure he is maximizing his itemized deductions. 
B) Establish a home equity credit line to finance other consumer credit,such as an auto purchase. 
C) Contribute as much as possible to a tax-deferred retirement account,such as his 401(k). 
D) Invest in municipal bonds to receive tax-exempt income. 
E) All of the above would be strategies available to Joseph to reduce his future taxes.

Question 3

A tax system in which tax rates increase as income increases is called a(n)________ system.

Accepted Answer

A) progressive tax 
B) universal tax 
C) regressive tax 
D) prorated tax 
A) progressive tax 
B) universal tax 
C) regressive tax 
D) prorated tax

Question 4

Six schedules are commonly used by taxpayers filing Form 1040.Give the title of each of these six basic schedules: A,B,C,D,E,EIC.

Accepted Answer

Schedule A: Itemized Deductions
Schedule

Question 5

Approximately what percent of individual income taxes are collected through withholding from wages?

Accepted Answer

A) 99% 
B) 70% 
C) 50% 
D) 25% 
A) 99% 
B) 70% 
C) 50% 
D) 25%

Question 6

Elizabeth currently makes $45,000 per year and is in a 25% tax bracket.If she contributes $2,400 to her 401(k)plan at work,by how much will this lower her taxable income?

Accepted Answer

A) $7,500 
B) $600 
C) $2,400 
D) $11,250 
A) $7,500 
B) $600 
C) $2,400 
D) $11,250

Question 7

Craig Ripley sold his stock in Gandy Corporation for a price less than what he paid for it.Craig will experience

Accepted Answer

A) a capital loss tax. 
B) a capital gains tax. 
C) a capital gain. 
D) a capital loss. 
E) bracket creep. 
A) a capital loss tax. 
B) a capital gains tax. 
C) a capital gain. 
D) a capital loss. 
E) bracket creep.

Question 8

Leticia is a single person who makes $45,000 per year.This year she paid $2,000 in student loan interest,$1,500 in medical expenses,$7,200 in rent and $4,800 in car loan payments.She contributes $3,600 per year to her 401(k)plan at work.Give her some tax advice.

Accepted Answer

A) Single people should always take the standard deduction. 
B) People who have medical expenses should always itemize their deductions. 
C) Calculate your taxes using both methods to see which provides a greater deduction. 
D) You should itemize if you pay interest,since interest of any kind is tax deductible. 
A) Single people should always take the standard deduction. 
B) People who have medical expenses should always itemize their deductions. 
C) Calculate your taxes using both methods to see which provides a greater deduction. 
D) You should itemize if you pay interest,since interest of any kind is tax deductible.

Question 9

Explain how to calculate your taxable income,and how to determine the need for a tax payment or refund.

Accepted Answer

First,calculate total gross income by ad

Question 10

If you made a mistake,an amended tax return may be filed on Form

Accepted Answer

A) 1040. 
B) 1040A. 
C) 1040X. 
D) 1040ZX. 
E) 1040EZ. 
A) 1040. 
B) 1040A. 
C) 1040X. 
D) 1040ZX. 
E) 1040EZ.

Question 11

Three years ago you purchased a share of CompUTech stock for $32,which you could sell today at the current market price of $252.What would be your capital gain on the sale,ignoring commissions?

Accepted Answer

A) $32 
B) $220 
C) $252 
D) $284 
A) $32 
B) $220 
C) $252 
D) $284

Question 12

From the list below choose the item that is not a permissible tax deduction.

Accepted Answer

A) State,local,and real estate taxes 
B) Home equity loan interest on debt up to $100,000 
C) Auto,truck,or van loan interest 
D) Interest on money borrowed to invest,within the IRS limits based on investment income 
E) Unreimbursed job-related expenses and tax preparation costs within the IRS limits 
A) State,local,and real estate taxes 
B) Home equity loan interest on debt up to $100,000 
C) Auto,truck,or van loan interest 
D) Interest on money borrowed to invest,within the IRS limits based on investment income 
E) Unreimbursed job-related expenses and tax preparation costs within the IRS limits

Question 13

The deadline to file your income tax return is ________ although an automatic extension may be filed.

Accepted Answer

A) March 15 
B) March 30 
C) April 15 
D) April 30 
A) March 15 
B) March 30 
C) April 15 
D) April 30

Question 14

Katarina worked as an ER nurse,and knows that demand for the job is high.However,prior to returning to work,when the twins enter kindergarten,she will need to take classes on the latest technological advancements.Which of the following tax planning strategies should the Bajorshiks consider as they plan their financial future?

Accepted Answer

A) When Katrina returns to school,they should track school-related expenses and determine eligibility for the Lifetime Learning credit. 
B) While the children are under age 13,the Bajorshiks should track childcare expenses and determine eligibility for the child and dependent care credit. 
C) Both A and B are legitimate tax planning strategies that the couple should consider. 
D) Neither A nor B is a tax planning strategy that is relevant to this couple's situation. 
A) When Katrina returns to school,they should track school-related expenses and determine eligibility for the Lifetime Learning credit. 
B) While the children are under age 13,the Bajorshiks should track childcare expenses and determine eligibility for the child and dependent care credit. 
C) Both A and B are legitimate tax planning strategies that the couple should consider. 
D) Neither A nor B is a tax planning strategy that is relevant to this couple's situation.

Question 15

A source of tax-free income is

Accepted Answer

A) interest on municipal bonds. 
B) inheritances. 
C) foreign income incurred by U.S.citizens living and working abroad. 
D) All of the above are sources of tax-free income. 
A) interest on municipal bonds. 
B) inheritances. 
C) foreign income incurred by U.S.citizens living and working abroad. 
D) All of the above are sources of tax-free income.

Question 16

Suppose that you are not able to complete your tax returns by April 15.Which of the following statements is most accurate?

Accepted Answer

A) You must provide adequate need in tax court,requesting extension of the deadline. 
B) You can apply for an automatic extension - no questions asked,but you must enclose a check in payment for estimated taxes due. 
C) You may have an extension,and the taxes are not due until the extension expires. 
D) You do not have to pay interest on any taxes due on April 15,provided that you have filed for and have an approved extension prior to April 1 of the tax year. 
A) You must provide adequate need in tax court,requesting extension of the deadline. 
B) You can apply for an automatic extension - no questions asked,but you must enclose a check in payment for estimated taxes due. 
C) You may have an extension,and the taxes are not due until the extension expires. 
D) You do not have to pay interest on any taxes due on April 15,provided that you have filed for and have an approved extension prior to April 1 of the tax year.

Question 17

An IRS-allowed reduction in your income for yourself,your spouse,and any dependents that is subtracted before you compute your taxes is called a(n)

Accepted Answer

A) itemized exemptions. 
B) standard exemptions. 
C) marital exemptions. 
D) personal exemptions. 
A) itemized exemptions. 
B) standard exemptions. 
C) marital exemptions. 
D) personal exemptions.

Question 18

In 2010 you purchased a share of stock for $125 and you sold it this year for $250.Legally,you don't need to pay any taxes on this transaction.

Accepted Answer

A) True 
 B)False

Question 19

What would be the equivalent taxable yield on a 9% municipal bond if you are in the 28% tax bracket?

Accepted Answer

A) 6.48% 
B) 7.03% 
C) 12.5% 
D) 8.5% 
A) 6.48% 
B) 7.03% 
C) 12.5% 
D) 8.5%

Question 20

Who must file a federal income tax return?

Accepted Answer

A) Everyone with an earned income during the year 
B) All heads of household 
C) All American citizens 
D) Individuals whose income meets federal guidelines 
E) Only those who have to file a state income tax return 
A) Everyone with an earned income during the year 
B) All heads of household 
C) All American citizens 
D) Individuals whose income meets federal guidelines 
E) Only those who have to file a state income tax return

Currently,the highest tax bracket for taxpayers is 37.5 percent.

Which of the following tax planning strategies could Joseph consider to reduce his future tax bills?

A tax system in which tax rates increase as income increases is called a(n)________ system.

Six schedules are commonly used by taxpayers filing Form 1040.Give the title of each of these six basic schedules: A,B,C,D,E,EIC.

Approximately what percent of individual income taxes are collected through withholding from wages?

Elizabeth currently makes $45,000 per year and is in a 25% tax bracket.If she contributes $2,400 to her 401(k)plan at work,by how much will this lower her taxable income?

Craig Ripley sold his stock in Gandy Corporation for a price less than what he paid for it.Craig will experience

Leticia is a single person who makes $45,000 per year.This year she paid $2,000 in student loan interest,$1,500 in medical expenses,$7,200 in rent and $4,800 in car loan payments.She contributes $3,600 per year to her 401(k)plan at work.Give her some tax advice.

Explain how to calculate your taxable income,and how to determine the need for a tax payment or refund.

If you made a mistake,an amended tax return may be filed on Form

Three years ago you purchased a share of CompUTech stock for $32,which you could sell today at the current market price of $252.What would be your capital gain on the sale,ignoring commissions?

From the list below choose the item that is not a permissible tax deduction.

The deadline to file your income tax return is ________ although an automatic extension may be filed.

A source of tax-free income is

Suppose that you are not able to complete your tax returns by April 15.Which of the following statements is most accurate?

An IRS-allowed reduction in your income for yourself,your spouse,and any dependents that is subtracted before you compute your taxes is called a(n)

In 2010 you purchased a share of stock for $125 and you sold it this year for $250.Legally,you don't need to pay any taxes on this transaction.

What would be the equivalent taxable yield on a 9% municipal bond if you are in the 28% tax bracket?

Who must file a federal income tax return?

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

Currently,the highest tax bracket for taxpayers is 37.5 percent.

Which of the following tax planning strategies could Joseph consider to reduce his future tax bills?

A tax system in which tax rates increase as income increases is called a(n)________ system.

Six schedules are commonly used by taxpayers filing Form 1040.Give the title of each of these six basic schedules: A,B,C,D,E,EIC.

Approximately what percent of individual income taxes are collected through withholding from wages?

Elizabeth currently makes $45,000 per year and is in a 25% tax bracket.If she contributes $2,400 to her 401(k)plan at work,by how much will this lower her taxable income?

Craig Ripley sold his stock in Gandy Corporation for a price less than what he paid for it.Craig will experience

Leticia is a single person who makes $45,000 per year.This year she paid $2,000 in student loan interest,$1,500 in medical expenses,$7,200 in rent and $4,800 in car loan payments.She contributes $3,600 per year to her 401(k)plan at work.Give her some tax advice.

Explain how to calculate your taxable income,and how to determine the need for a tax payment or refund.

If you made a mistake,an amended tax return may be filed on Form

Three years ago you purchased a share of CompUTech stock for $32,which you could sell today at the current market price of $252.What would be your capital gain on the sale,ignoring commissions?

From the list below choose the item that is not a permissible tax deduction.

The deadline to file your income tax return is ________ although an automatic extension may be filed.

A source of tax-free income is

Suppose that you are not able to complete your tax returns by April 15.Which of the following statements is most accurate?

An IRS-allowed reduction in your income for yourself,your spouse,and any dependents that is subtracted before you compute your taxes is called a(n)

In 2010 you purchased a share of stock for $125 and you sold it this year for $250.Legally,you don't need to pay any taxes on this transaction.

What would be the equivalent taxable yield on a 9% municipal bond if you are in the 28% tax bracket?

Who must file a federal income tax return?

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