Question 1

You pay taxes only when you sell stock and realize the gain.

Accepted Answer

A) True 
 B)False

Question 2

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 last 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 3

The FICA tax is typically deducted from your salary at a rate of ________until your salary reaches a point where it is no longer taxed at the rate of ________ for Social Security.

Accepted Answer

A) 6.20 percent;1.45 percent 
B) 7.65 percent;6.20 percent 
C) 15.3 percent;7.65 percent 
D) 20 percent;10 percent

Question 4

If you're in the 25% marginal tax bracket,what is the equivalent taxable yield on an 10% municipal bond?

Accepted Answer

A) 11.76 
B) 13.33 
C) 4.00 
D) 12.50

Question 5

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.

Question 6

Compared to the standard deduction,it is easier to calculate your itemized deductions.

Accepted Answer

A) True 
 B)False

Question 7

What is Samuel's adjusted gross income for 2014?

Accepted Answer

A) $39,500 
B) $32,500 
C) $37,910 
D) $38,700

Question 8

Gross income is another name for ________ income.

Accepted Answer

A) expected 
B) total 
C) net 
D) value added

Question 9

Joseph can qualify for all of the following except the

Accepted Answer

A) mortgage interest payments deduction. 
B) deduction for unreimbursed job-related expenses that are in excess of 2 percent of AGI. 
C) Lifetime Learning Credit. 
D) real estate property taxes deduction. 
E) Joseph can qualify for all of the above to reduce his tax liability.

Question 10

If the Bajorshiks' income does not exceed the phase-out level of $110,000 in 2014,by how much will the child tax credit reduce their tax liability?

Accepted Answer

A) Their tax liability will be reduced by $750. 
B) Their tax liability will be reduced by $2,000. 
C) Their tax liability will be reduced by $2,100. 
D) Their tax liability will be reduced by $3,000.

Question 11

Deductions calculated using the federal tax form "Schedule A" which are totaled and then subtracted from taxable income are called

Accepted Answer

A) itemized deductions. 
B) standard deductions. 
C) personal expenditures. 
D) personal exemptions.

Question 12

Danielle is a divorced single parent who is currently paying back a college loan,attending graduate school part-time,and working full-time earning $42,000.She has custody and provides all support for her child.Which of the following adjustments,deductions,or credits might apply to her?

Accepted Answer

A) Adjustment for student loan interest 
B) Child tax credit 
C) Child and dependent care credit 
D) Lifetime learning tax credit 
E) All of the above

Question 13

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 14

What is Samuel's taxable income for 2014?

Accepted Answer

A) $38,700 
B) $29,350 
C) $33,300 
D) $27,760

Question 15

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 16

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

AGI stands for?

Accepted Answer

A) Allowed granted income 
B) Adjusted gross interest 
C) Adjusted gross income 
D) Allowed grand interest

Question 18

Why is tax planning so important?

Accepted Answer

The answer of Why is tax planning so important?...

Question 19

Which of the following is a source of tax-free income?

Accepted Answer

A) Welfare benefits 
B) Earnings on your IRA 
C) Federal income tax refunds 
D) Child support payments 
E) All of the above

Question 20

What is Richard and Katarina's taxable income?

Accepted Answer

A) $63,097 
B) $63,497 
C) $79,297 
D) $83,247 
E) $98,712

Exam 4: Tax Planning and Strategies