Question 1

Judy Hays wants to give $3,200 to the building fund at her local church.Assuming Judy can itemize her deductions,how much will this contribution save her on her federal income taxes if she is in the 28 percent marginal tax bracket?

Accepted Answer

A) $3,200 
B) $896 
C) $2,624 
D) $0

Question 2

Which of the following types of taxes is deductible for federal income tax purposes?

Accepted Answer

A) Federal income taxes 
B) Real estate property taxes 
C) Federal Social Security taxes 
D) Federal excise taxes on tires

Question 3

Which tax form do you use to file an amended tax return for previous year?

Accepted Answer

A) 1040ES 
B) 1040X 
C) 1040AM 
D) 1099

Question 4

The money you receive back because you have overpaid your taxes is called a tax return.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following persons is (are) practicing tax avoidance?

Accepted Answer

A) Bartender who does not report all his tips 
B) Plumber who does not report a barter transaction 
C) Employee who deducts qualifying job-related expenses 
D) All of these

Question 6

The lifetime learning credit may be claimed for tuition and related expenses only for the first two years of postsecondary school.

Accepted Answer

A) True 
 B)False

Question 7

Tax-exempt income is most valuable to low-income taxpayers.

Accepted Answer

A) True 
 B)False

Question 8

Tax avoidance is illegal whereas tax evasion is legal.

Accepted Answer

A) True 
 B)False

Question 9

Numerous job-related expenses can potentially be deducted from federal income taxes as ____ expenses.

Accepted Answer

A) tax 
B) interest 
C) charitable 
D) miscellaneous

Question 10

Tax planning includes eliminating,reducing or deferring income taxes to be paid.

Accepted Answer

A) True 
 B)False

Question 11

The amount of the standard deduction depends on one's filing status.

Accepted Answer

A) True 
 B)False

Question 12

Lucy and Max,ages 28 and 30,have earned income of $30,400 and adjusted gross income of $29,500,500.They spent $4,200 on child care for their young son so that they could both work part time and finish their college degrees.Which of the following tax credits could reduce their taxes?

Accepted Answer

A) Dependent care credit 
B) Earned income credit 
C) Both dependent care credit and earned income credit 
D) Neither dependent care credit nor earned income credit

Question 13

Once you determine your gross income you may take several subtractions including adjustments,deductions,exemptions and credits to arrive at your actual taxable income.

Accepted Answer

A) True 
 B)False

Question 14

You pay personal taxes on your calculated ____ income.

Accepted Answer

A) marginal 
B) gross 
C) taxable 
D) adjusted gross

Question 15

Interest income is reported to the recipient on a W-2 form.

Accepted Answer

A) True 
 B)False

Question 16

Tax losses are created when deductions generated from an investment (such as depreciation and net investment losses) exceed the income from an investment.

Accepted Answer

A) True 
 B)False

Question 17

Each year the tax brackets are adjusted to reduce the effects of inflation.

Accepted Answer

A) True 
 B)False

Question 18

Tax-deferred compounding refers to the tax-free growth of investments in a tax-deferred account.

Accepted Answer

A) True 
 B)False

Question 19

Taxes are defined as compulsory charges imposed by a government on its citizens and their property.

Accepted Answer

A) True 
 B)False

Question 20

The Internal Revenue Service is the agency that collects federal income taxes.

Accepted Answer

A) True 
 B)False

Exam 4: Managing Income Taxes

Judy Hays wants to give $3,200 to the building fund at her local church.Assuming Judy can itemize her deductions,how much will this contribution save her on her federal income taxes if she is in the 28 percent marginal tax bracket?

Which of the following types of taxes is deductible for federal income tax purposes?

Which tax form do you use to file an amended tax return for previous year?

The money you receive back because you have overpaid your taxes is called a tax return.

Which of the following persons is (are) practicing tax avoidance?

The lifetime learning credit may be claimed for tuition and related expenses only for the first two years of postsecondary school.

Tax-exempt income is most valuable to low-income taxpayers.

Tax avoidance is illegal whereas tax evasion is legal.

Numerous job-related expenses can potentially be deducted from federal income taxes as ____ expenses.

Tax planning includes eliminating,reducing or deferring income taxes to be paid.

The amount of the standard deduction depends on one's filing status.

Lucy and Max,ages 28 and 30,have earned income of $30,400 and adjusted gross income of $29,500,500.They spent $4,200 on child care for their young son so that they could both work part time and finish their college degrees.Which of the following tax credits could reduce their taxes?

Once you determine your gross income you may take several subtractions including adjustments,deductions,exemptions and credits to arrive at your actual taxable income.

You pay personal taxes on your calculated ____ income.

Interest income is reported to the recipient on a W-2 form.

Tax losses are created when deductions generated from an investment (such as depreciation and net investment losses) exceed the income from an investment.

Each year the tax brackets are adjusted to reduce the effects of inflation.

Tax-deferred compounding refers to the tax-free growth of investments in a tax-deferred account.

Taxes are defined as compulsory charges imposed by a government on its citizens and their property.

The Internal Revenue Service is the agency that collects federal income taxes.