Question 1

Tax-deferred retirement plans are a type of:

Accepted Answer

A)  exemption.
B)  itemized deduction.
C)  passive income.
D)  tax shelter.
E)  tax credit.F) A) and B)
G) A) and C)

Question 2

The "head of household" filing status is for people who are:

Accepted Answer

A)  recently divorced.
B)  the surviving spouse.
C)  unmarried and have dependent children.
D)  married but only one spouse has income.
E)  married and each spouse makes about the same incomE.F) A) and E)
G) A) and D)

Question 3

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

Accepted Answer

A)  $500.
B)  $36.
C)  $464.
D)  $280.
E)  $180.F) A) and D)
G) C) and D)

Question 4

Cameron Nelson wants to complete his own federal income tax return.He has several questions about the tax form to use and what items should be reported as income.What sources of assistance would you recommend for Cameron?

Accepted Answer

The answer of Cameron Nelson wants to complete his own...

Question 5

An exclusion affects a person's taxes by:

Accepted Answer

A)  reducing the amount of taxable income.
B)  increasing itemized deductions.
C)  decreasing itemized deductions.
D)  decreasing the number of exemptions a person can claim.
E)  increasing the number of exemptions a person can claim.F) C) and D)
G) A) and B)

Question 6

Which of the following would be deducted from gross income to obtain adjusted gross income?

Accepted Answer

A)  alimony payments
B)  mortgage interest
C)  medical expenses
D)  foreign income exclusion
E)  charitable contributionsF) A) and D)
G) None of the above

Question 7

A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:

Accepted Answer

A)  receive a refund of $3,975.
B)  owe $4,350.
C)  owe $375.
D)  receive a refund of $4,350.
E)  receive a refund of $375.F) B) and E)
G) B) and D)

Question 8

The ______________ property tax is based on the value of land and buildings at some point in time.

Accepted Answer

A)  personal
B)  real estate
C)  direct
D)  proportional
E)  regressiveF) B) and D)
G) A) and B)

Question 9

Haley Thomas has adjusted gross income of $40,000.She paid $3,600 in property taxes during the year.How much of the tax can she deduct from adjusted gross income?

Accepted Answer

A)  $3,600
B)  $3,000
C)  $1,800
D)  $600
E)  $0F) B) and E)
G) None of the above

Question 10

Money received in the form of dividends or interest is classified as ____________ income.

Accepted Answer

A)  passive
B)  earned
C)  excluded
D)  capital gain
E)  investmentF) B) and E)
G) A) and C)

Question 11

An exemption affects a person's tax situation by:

Accepted Answer

A)  increasing the standard deduction.
B)  increasing the taxpayer's marginal tax rate.
C)  decreasing itemized deductions.
D)  reducing the taxpayer's taxable income.
E)  decreasing tax credits.F) A) and B)
G) A) and C)

Question 12

Exemptions are deductions for yourself,your spouse,and qualified dependents that you can deduct from adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 13

Which one of the following people is least likely to have to file a federal income tax return?

Accepted Answer

A)  a U.S.citizen who is a resident of Puerto Rico
B)  a U.S.citizen living and working in a foreign country
C)  a person earning less than $9,000
D)  a person over age 65
E)  a college studentF) A) and C)
G) A) and E)

Question 14

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

Accepted Answer

A)  correspondence audit
B)  office audit
C)  field audit
D)  detailed audit
E)  research auditF) None of the above
G) A) and B)

Question 15

John Camey goes into a local department store and purchases a new suit.He pays $43 in taxes on this purchase.What type of tax is this most likely to be?

Accepted Answer

A)  general sales tax
B)  excise tax
C)  personal property tax
D)  income tax
E)  estate taxF) D) and E)
G) C) and D)

Question 16

Approximately what percent of tax filers are audited each year?

Accepted Answer

A)  1%
B)  3%
C)  5%
D)  10%
E)  15%F) B) and E)
G) A) and E)

Question 17

Kim Ye is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes. 
Calculate the dollar amount of estimated taxes that Kim owes.

Accepted Answer

A)  $6,000.00
B)  $6,181.25
C)  $10,000.00
D)  $11,200.25
E)  $16,181.25F) D) and E)
G) A) and B)

Question 18

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

Accepted Answer

A)  adjusted gross income.
B)  taxable income.
C)  earned income.
D)  passive income.
E)  total exclusions.F) B) and C)
G) A) and B)

Question 19

Which one of these terms is defined as the use of legitimate methods to reduce one's taxes?

Accepted Answer

A)  tax evasion
B)  tax avoidance
C)  tax exemption
D)  tax deferral
E)  tax deductionF) C) and D)
G) A) and B)

Question 20

Which of the following would qualify a person for an exemption when computing taxable income?

Accepted Answer

A)  mortgage interest
B)  a tax shelter
C)  a dependent
D)  charitable contributions
E)  passive incomeF) B) and C)
G) All of the above

Exam 4: Planning Your Tax Strategy

Money received in the form of dividends or interest is classified as ____________ income.

Correct AnswerverifiedShow Answer

An exemption affects a person's tax situation by:

Correct AnswerverifiedShow Answer

John Camey goes into a local department store and purchases a new suit.He pays $43 in taxes on this purchase.What type of tax is this most likely to be?

Correct AnswerverifiedShow Answer

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

Correct AnswerverifiedShow Answer

The ______________ property tax is based on the value of land and buildings at some point in time.

Correct AnswerverifiedShow Answer

A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:

Correct AnswerverifiedShow Answer

Exemptions are deductions for yourself,your spouse,and qualified dependents that you can deduct from adjusted gross income.

Correct AnswerverifiedShow Answer

Which one of these terms is defined as the use of legitimate methods to reduce one's taxes?

Correct AnswerverifiedShow Answer

Which of the following would qualify a person for an exemption when computing taxable income?

Correct AnswerverifiedShow Answer

Approximately what percent of tax filers are audited each year?

Correct AnswerverifiedShow Answer

Cameron Nelson wants to complete his own federal income tax return.He has several questions about the tax form to use and what items should be reported as income.What sources of assistance would you recommend for Cameron?

Correct AnswerverifiedShow Answer

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

Correct AnswerverifiedShow Answer

Kim Ye is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes. Calculate the dollar amount of estimated taxes that Kim owes.

Correct AnswerverifiedShow Answer

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

Correct AnswerverifiedShow Answer

Which of the following would be deducted from gross income to obtain adjusted gross income?

Correct AnswerverifiedShow Answer

Tax-deferred retirement plans are a type of:

Correct AnswerverifiedShow Answer

The "head of household" filing status is for people who are:

Correct AnswerverifiedShow Answer

Which one of the following people is least likely to have to file a federal income tax return?

Correct AnswerverifiedShow Answer

Haley Thomas has adjusted gross income of $40,000.She paid $3,600 in property taxes during the year.How much of the tax can she deduct from adjusted gross income?

Correct AnswerverifiedShow Answer

An exclusion affects a person's taxes by:

Correct AnswerverifiedShow Answer

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