Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Tax planning is [confined to the first quarter of the year | a year-round activity].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 2

Pete and Pam are married with four dependent children.Pete and Pam can legally file using which of the following filing statuses?

Accepted Answer

A)  married filing separately 
B)  married filing jointly 
C)  head of household 
D)  a and b 
E)  a,b,and c

Question 3

Personal exemptions are tax deductions based on the number of taxpayers and dependents in the taxpayer's household.

Accepted Answer

A) True 
 B)False

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-If you earn less than $15,000,you likely pay more in [federal income tax | social security taxes].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 5

The standard deduction is a blanket deduction that depends on the taxpayers

Accepted Answer

A)  filing status 
B)  age 
C)  vision 
D)  all of the above.

Question 6

Tax practitioners that are Federally licensed are called

Accepted Answer

A)  Certified Public Accountants 
B)  Certified Financial Planners 
C)  Tax Attorneys 
D)  Enrolled Agents 
E)  None of the above

Question 7

A married couple filing a joint return has Ms.Cindy Cook,a CPA,complete their return.The IRS will hold only Ms.Cook responsible for any errors on the return.

Accepted Answer

A) True 
 B)False

Question 8

The Robertsons,a couple with an AGI of $28,500,decided to contribute the maximum amount possible towards their IRAs even though Mr.Robertson had a pension plan at work.He named his wife as beneficiary of the IRA.What is such a tax strategy called?

Accepted Answer

A)  tax deferral since he'll have to pay taxes later when he withdraws the money 
B)  tax avoidance since he'll never have to pay taxes on the IRA contribution 
C)  tax evasion since this is illegal 
D)  tax ignorance since he can't deduct the contribution anyway due to his pension plan at work 
E)  income shifting to another person in a lower tax bracket

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-If you pay a professional to prepare your taxes,any errors on the return will be [your | the preparer's] responsibility.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A tax credit would result from [an IRA contribution | child care expenses].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 11

If your AGI is less than $100,000 and you do not itemize deductions,the IRS will compute your taxes for you.

Accepted Answer

A) True 
 B)False

Question 12

All major software providers have online versions for preparing federal taxes.This software is

Accepted Answer

A)  free to all tax filers 
B)  free to qualified tax filers 
C)  for a fee for all tax filers 
D)  available on a free trial to all tax filers 
E)  available on a free trial to qualified tax filers

Question 13

The regular income tax filing deadline is April 1 of each year.

Accepted Answer

A) True 
 B)False

Question 14

Who would be most likely to have to pay estimated taxes?

Accepted Answer

A)  insurance salesman 
B)  teacher 
C)  corporate manager 
D)  state worker 
E)  state police

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The date by which your tax liability must be paid in order to avoid late payment penalties and/or interest is [April 15 | August 15].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 16

For tax purposes,head-of-household refers to

Accepted Answer

A)  the person with the larger income when a couple is filing a joint return. 
B)  a single individual with dependents. 
C)  a single individual who owns a home. 
D)  the spouse who has the only income for a couple filing a joint return. 
E)  a widow(er)with no dependents but with debts from death of spouse three years earlier.

Question 17

You would typically not include ____ in your gross income.

Accepted Answer

A)  wages and salaries 
B)  life insurance death benefit payments 
C)  interest and dividends 
D)  pension income 
E)  gambling winnings

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-My son,age 26 and a full-time college student,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.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 19

In 2011,the total Social Security tax was

Accepted Answer

A)  6.0%. 
B)  6.75%. 
C)  7.25%. 
D)  11%. 
E)  13.3%.

Question 20

Tax evasion is a legal means to avoid tax liabilities.

Accepted Answer

A) True 
 B)False

Exam 3: Preparing Your Taxes

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Tax planning is [confined to the first quarter of the year | a year-round activity].

Pete and Pam are married with four dependent children.Pete and Pam can legally file using which of the following filing statuses?

Personal exemptions are tax deductions based on the number of taxpayers and dependents in the taxpayer's household.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If you earn less than $15,000,you likely pay more in [federal income tax | social security taxes].

The standard deduction is a blanket deduction that depends on the taxpayers

Tax practitioners that are Federally licensed are called

A married couple filing a joint return has Ms.Cindy Cook,a CPA,complete their return.The IRS will hold only Ms.Cook responsible for any errors on the return.

The Robertsons,a couple with an AGI of $28,500,decided to contribute the maximum amount possible towards their IRAs even though Mr.Robertson had a pension plan at work.He named his wife as beneficiary of the IRA.What is such a tax strategy called?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If you pay a professional to prepare your taxes,any errors on the return will be [your | the preparer's] responsibility.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A tax credit would result from [an IRA contribution | child care expenses].

If your AGI is less than $100,000 and you do not itemize deductions,the IRS will compute your taxes for you.

All major software providers have online versions for preparing federal taxes.This software is

The regular income tax filing deadline is April 1 of each year.

Who would be most likely to have to pay estimated taxes?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The date by which your tax liability must be paid in order to avoid late payment penalties and/or interest is [April 15 | August 15].

For tax purposes,head-of-household refers to

You would typically not include ____ in your gross income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -My son,age 26 and a full-time college student,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.

In 2011,the total Social Security tax was

Tax evasion is a legal means to avoid tax liabilities.