Question 1

The percentage of the last dollar you earn that goes toward your taxes is your

Accepted Answer

A)  tax deferral rate. 
B)  base tax rate. 
C)  average tax rate. 
D)  marginal tax rate.

Question 2

What are the five general tax strategies in tax planning?

Accepted Answer

The answer of What are the five general tax strategies...

Question 3

Understanding how tax planning affects your personal finances is actually important for most taxpayers,not just the wealthy,because

Accepted Answer

A)  many people don't take advantage of all the deductions and tax credits they are entitled to. 
B)  many people pay higher taxes or receive smaller refunds than they need to. 
C)  the average American spends close to one-third of the year earning the money necessary to pay his or her taxes. 
D)  only choices A and B. 
E)  all of the above choices.

Question 4

What are the benefits of filing taxes electronically?

Accepted Answer

The answer of What are the benefits of filing taxes...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

You and spouse are filing a joint return.Your current deductions have reduced your taxable income to $88,990,bringing you into the 25 percent tax bracket.The first dollars you earned will be taxed at the ________ tax bracket.

Accepted Answer

A)  10 percent 
B)  15 percent 
C)  25 percent 
D)  33 percent

Question 7

Assume that you have a marginal tax rate of 28 percent,a state income tax rate of 4 percent,and have a city income tax rate of 1 percent.The tax for Social Security and Medicare is 7.65 percent.What would be the effective marginal tax rate on your last dollar of earnings?

Accepted Answer

A)  28 percent 
B)  32 percent 
C)  33 percent 
D)  40.65 percent 
E)  Cannot determine from the information provided

Question 8

Expenditures that are subtracted in an effort to calculate the lowest possible taxable income are called

Accepted Answer

A)  exemptions. 
B)  deductions. 
C)  capital expenses. 
D)  fixed expenses.

Question 9

Taxes are collected on a pay-as-you-go basis.

Accepted Answer

A) True 
 B)False

Question 10

A child tax credit reduces the federal income tax you owe by up to $1,000 for each qualifying child under the age of

Accepted Answer

A)  15. 
B)  17. 
C)  19. 
D)  21.

Question 11

Tax credits reduce your taxes on a dollar-for-dollar basis.

Accepted Answer

A) True 
 B)False

Question 12

If you are self-employed,you have to pay both the employer and employee portions of FICA,for a total rate of 20 percent.

Accepted Answer

A) True 
 B)False

Question 13

Katarina and Richard are a busy young couple with a son, Caleb, who is 6 and twin daughters, Stacy and Casey, who are actively exploring the world as four-year-olds. Before the twins were born, Katarina and Richard bought their first home with plenty of indoor and outdoor space for a growing young family. The Bajorshiks are concerned about their 2014 tax issues, but they are also committed to planning for the future of their family. Next year Richard should be able to pay off the remaining balance of his law school student loans. Contributing to Richard's Roth IRA is an annual priority. The following information reflects tax year 2014.
Gross income $98,712
Student loan interest $1,965
Richard's traditional IRA $1,500
Total itemized deductions $12,000
Standard deduction for 2014 $12,400
Personal exemption amount $3,950
Marginal tax bracket 25%
-Approximately how much will the Bajorshiks save in 2014 income tax payments as a result of Richard's student loan interest?

Accepted Answer

A)  $1,965.00 
B)  $196.50 
C)  $491.25 
D)  $1,473.75 
E)  $0

Question 14

Describe the four filing status classifications.

Accepted Answer

The answer of Describe the four filing status classifications....

Question 15

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

Question 16

Karen and her husband, Jeffrey, are facing a new income tax situation this year. She is a corporate accountant and Jeffrey is an engineer. Their gross salaries total $89,000. Both graduated from four-year universities five years ago and are still paying off large student loans. She is now attending school part-time to prepare for the CPA exam. The Bosteins incurred considerable expenses in the process of adopting an infant this year, and they have the ongoing expense of daycare. In January of last year they closed on their new home. Although trained as an accountant, Karen's work has not involved income tax preparation. Help them consider the following questions.
-Which of the following credits would not apply to the Bosteins?

Accepted Answer

A)  Adoption credit 
B)  Health care premium credit (children's version) 
C)  Child and dependent care credit 
D)  Lifetime Learning tax credit

Question 17

If you are an unmarried taxpayer,with at least one child or dependent living with you,your filing status should be

Accepted Answer

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

Question 18

Karen and her husband, Jeffrey, are facing a new income tax situation this year. She is a corporate accountant and Jeffrey is an engineer. Their gross salaries total $89,000. Both graduated from four-year universities five years ago and are still paying off large student loans. She is now attending school part-time to prepare for the CPA exam. The Bosteins incurred considerable expenses in the process of adopting an infant this year, and they have the ongoing expense of daycare. In January of last year they closed on their new home. Although trained as an accountant, Karen's work has not involved income tax preparation. Help them consider the following questions.
-The Bosteins

Accepted Answer

A)  have no dependents to declare. 
B)  should use the married filing separately filing status. 
C)  should calculate their taxes itemizing and taking the standard deduction to see which is greater. 
D)  none of the above.

Question 19

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

Question 20

Excise taxes

Accepted Answer

A)  are imposed on specific purchases, such as alcohol and cigarettes. 
B)  are often aimed at reducing the consumption of the items being taxed. 
C)  are referred to as "sin taxes" in some cases. 
D)  all of the above.

Exam 4: Tax Planning and Strategies

The percentage of the last dollar you earn that goes toward your taxes is your

What are the five general tax strategies in tax planning?

Understanding how tax planning affects your personal finances is actually important for most taxpayers,not just the wealthy,because

What are the benefits of filing taxes electronically?

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

You and spouse are filing a joint return.Your current deductions have reduced your taxable income to $88,990,bringing you into the 25 percent tax bracket.The first dollars you earned will be taxed at the ________ tax bracket.

Assume that you have a marginal tax rate of 28 percent,a state income tax rate of 4 percent,and have a city income tax rate of 1 percent.The tax for Social Security and Medicare is 7.65 percent.What would be the effective marginal tax rate on your last dollar of earnings?

Expenditures that are subtracted in an effort to calculate the lowest possible taxable income are called

Taxes are collected on a pay-as-you-go basis.

A child tax credit reduces the federal income tax you owe by up to $1,000 for each qualifying child under the age of

Tax credits reduce your taxes on a dollar-for-dollar basis.

If you are self-employed,you have to pay both the employer and employee portions of FICA,for a total rate of 20 percent.

Describe the four filing status classifications.

Who must file a federal income tax return?

If you are an unmarried taxpayer,with at least one child or dependent living with you,your filing status should be

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?

Excise taxes