Question 1

Money received in the form of dividends or interest is commonly called:

Accepted Answer

A)  earned income.
B)  investment income.
C)  passive income.
D)  tax-deferred income.
E)  tax-exempt income.F) C) and D)
G) D) and E)

Question 2

A tax on the value of automobiles,boats,or furniture is referred to as:

Accepted Answer

A)  inheritance tax.
B)  estate tax.
C)  personal property tax.
D)  excise tax.
E)  general sales tax.F) B) and D)
G) A) and C)

Question 3

Mr.and Mrs.Keating want to give their son Dudley a total of $24,000.They each write him a check for $12,000 so they won't have to pay any gift tax.This is an example of:

Accepted Answer

A)  fraud.
B)  tax evasion.
C)  tax exclusion.
D)  tax avoidance.
E)  tax deferred income.F) C) and D)
G) C) and E)

Question 4

Which of the following would be excluded from gross income?

Accepted Answer

A)  Portfolio income
B)  Investment income
C)  Exclusions
D)  Passive income
E)  Earned incomeF) B) and D)
G) A) and C)

Question 5

Al Barkley is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes.
 What is Al's average tax rate?

Accepted Answer

A)  14.43%
B)  18.27%
C)  21.35%
D)  23.87%
E)  25.00%F) None of the above
G) A) and B)

Question 6

Taxable income is used to compute a person's:

Accepted Answer

A)  exemptions.
B)  income tax.
C)  deductions.
D)  capital gains.
E)  exclusions.F) B) and E)
G) A) and B)

Question 7

Which form would an individual use who has less than $100,000 in taxable income from wages,salaries,tips,unemployment compensation,interest,or dividends,and who is married,over age 67,and does not itemize deductions?

Accepted Answer

A)  Form 1040X
B)  Form 1040EZ
C)  Form 1040A
D)  Schedule A
E)  Schedule EF) B) and E)
G) All of the above

Question 8

A general sales tax is also referred to as an excise tax.

Accepted Answer

A) True 
 B)False

Question 9

Randal Ice is 57 years old,and has adjusted gross income of $32,000.He has medical expenses for the year ending 2016 of $6,000.How much of these expenses can he include as an itemized deduction?

Accepted Answer

A)  $0
B)  $2,400
C)  $2,800
D)  $3,600
E)  $4,500 Using the revised rate of 10% (until December 31, 2016 for those under 65 years old) , the solution would be: $32,000 *10.10 = $3,200; $6,000 - $3,200 = $2,800.F) None of the above
G) A) and D)

Question 10

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes owed by:

Accepted Answer

A)  $10
B)  $28
C)  $14
D)  $50
E)  $35F) B) and E)
G) C) and D)

Question 11

Capital gains refer to:

Accepted Answer

A)  tax-exempt investments.
B)  retirement accounts.
C)  profits from the sale of a capital asset.
D)  earnings from investments such as dividends or interest.
E)  tax-deferred investments.F) None of the above
G) B) and C)

Question 12

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)  $4,000.00
B)  $5,771.25
C)  $6,000.00
D)  $10,000.00
E)  $11,200.25F) None of the above
G) B) and C)

Question 13

_____________ are expenses that a taxpayer is allowed to deduct from adjusted gross income.

Accepted Answer

A)  Exemptions
B)  Standard deductions
C)  Itemized deductions
D)  Tax credits
E)  Passive incomeF) A) and B)
G) None of the above

Question 14

An excise tax is imposed by the federal and state governments on all of the following specific goods,except:

Accepted Answer

A)  clothing.
B)  gasoline.
C)  cigarettes.
D)  tires.
E)  air travel.F) A) and B)
G) B) and E)

Question 15

Maryellen Epplin worked in Mexico for part of the year and earned $50,000 while she was there.This income will not be included in her gross income for the year.This represents a tax:

Accepted Answer

A)  deduction.
B)  exclusion.
C)  exemption.
D)  credit.
E)  refund.F) D) and E)
G) A) and C)

Question 16

What are the advantages of a 401K?

Accepted Answer

Tax-deferred retirement plans such as 40...

Question 17

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) B) and D)
G) A) and D)

Question 18

Mike Hansen has adjusted gross income of $28,000.During the year,Mike decided he needed a larger home.He purchased a home on a golf course in the same town as his first home.Mike incurred $7,500 in moving expenses.How much of this can he include as an itemized deduction?

Accepted Answer

A)  $7,500
B)  $6,340
C)  $3,750
D)  $750
E)  $0F) C) and D)
G) A) and E)

Question 19

Earnings from a limited partnership would be an example of ____________ income.

Accepted Answer

A)  passive
B)  capital gain
C)  portfolio
D)  earned
E)  excludedF) B) and D)
G) B) and C)

Question 20

A tax ____________ is an amount subtracted directly from the amount of taxes owed.

Accepted Answer

A)  credit
B)  exemption
C)  deduction
D)  exclusion
E)  shelterF) C) and D)
G) D) and E)

Exam 4: Planning Your Tax Strategy

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

What are the advantages of a 401K?

Correct AnswerverifiedTax-deferred retirement plans such as 40...View AnswerShow Answer

A tax ____________ is an amount subtracted directly from the amount of taxes owed.

Correct AnswerverifiedShow Answer

Taxable income is used to compute a person's:

Correct AnswerverifiedShow Answer

Which of the following would be excluded from gross income?

Correct AnswerverifiedShow Answer

Earnings from a limited partnership would be an example of ____________ income.

Correct AnswerverifiedShow Answer

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes owed by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Randal Ice is 57 years old,and has adjusted gross income of $32,000.He has medical expenses for the year ending 2016 of $6,000.How much of these expenses can he include as an itemized deduction?

Correct AnswerverifiedShow Answer

Money received in the form of dividends or interest is commonly called:

Correct AnswerverifiedShow Answer

Al Barkley is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes. What is Al's average tax rate?

Correct AnswerverifiedShow Answer

_____________ are expenses that a taxpayer is allowed to deduct from adjusted gross income.

Correct AnswerverifiedShow Answer

Capital gains refer to:

Correct AnswerverifiedShow Answer

A tax on the value of automobiles,boats,or furniture is referred to as:

Correct AnswerverifiedShow Answer

Maryellen Epplin worked in Mexico for part of the year and earned $50,000 while she was there.This income will not be included in her gross income for the year.This represents a tax:

Correct AnswerverifiedShow Answer

Mr.and Mrs.Keating want to give their son Dudley a total of $24,000.They each write him a check for $12,000 so they won't have to pay any gift tax.This is an example of:

Correct AnswerverifiedShow Answer

An excise tax is imposed by the federal and state governments on all of the following specific goods,except:

Correct AnswerverifiedShow Answer

Mike Hansen has adjusted gross income of $28,000.During the year,Mike decided he needed a larger home.He purchased a home on a golf course in the same town as his first home.Mike incurred $7,500 in moving expenses.How much of this can he include as an itemized deduction?

Correct AnswerverifiedShow Answer

A general sales tax is also referred to as an excise tax.

Correct AnswerverifiedShow Answer

Which form would an individual use who has less than $100,000 in taxable income from wages,salaries,tips,unemployment compensation,interest,or dividends,and who is married,over age 67,and does not itemize deductions?

Correct AnswerverifiedShow Answer

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Tax-deferred retirement plans such as 40...
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