Question 1

Tax evasion is the use of illegal actions to reduce one's taxes.

Accepted Answer

A) True 
 B)False

Question 2

The main purpose of taxes is to:

Accepted Answer

A)   generate revenue for funding government programs.
B)   reduce the chances of inflation.
C)   create jobs.
D)   discourage use of certain goods and services.
E)   decrease competition from foreign companies.F) A) and D)
G) B) and E)

Question 3

The principal purpose of taxes is to control economic conditions.

Accepted Answer

A) True 
 B)False

Question 4

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) C) and D)
G) B) and C)

Question 5

A $2,000 deposit to a tax-deferred retirement account for a person in a 25 percent tax bracket would result in a reduced tax bill of:

Accepted Answer

A)   $2,000.
B)   $1,500.
C)   $1,200.
D)   $500.
E)   $300.F) C) and E)
G) A) and D)

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 C)
G) All of the above

Question 7

How is taxable income computed?

Accepted Answer

The answer of How is taxable income computed?...

Question 8

Union dues, fees for tax return preparation, and other miscellaneous expenses are:

Accepted Answer

A)   not deductible.
B)   fully deductible.
C)   deductible for self-employed individuals only.
D)   deductible for people in certain income categories.
E)   deductible to the extent they exceed two percent of adjusted gross income.F) A) and B)
G) B) and E)

Question 9

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 and does not itemize deductions?

Accepted Answer

A)   Form 1040X
B)   Form 1040EZ
C)   Form 1040A
D)   Schedule A
E)   Schedule EF) A) and E)
G) A) and D)

Question 10

Tax avoidance refers to illegal actions to reduce one's taxes.

Accepted Answer

A) True 
 B)False

Question 11

A ______ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical and child care costs.

Accepted Answer

A)   tax credit
B)   tax deduction
C)   flexible spending account
D)   tax deferred investment
E)   tax exempt investmentF) A) and B)
G) None of the above

Question 12

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) None of the above
G) A) and D)

Question 13

Estimated quarterly tax payments must be made by people who:

Accepted Answer

A)   are employed in a foreign country.
B)   receive dividends.
C)   work for the government.
D)   do not have adequate amounts withheld from income.
E)   itemize deductions.F) A) and B)
G) A) and C)

Question 14

A state may impose a personal property tax.

Accepted Answer

A) True 
 B)False

Question 15

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)   15.45%
B)   18.27%
C)   21.35%
D)   23.87%
E)   25.00%F) A) and B)
G) A) and C)

Question 16

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

Accepted Answer

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

Question 17

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Accepted Answer

A)   Inheritance
B)   Excise
C)   Gift
D)   Personal property
E)   EstateF) A) and B)
G) A) and C)

Question 18

A person's filing status is affected by marital status and dependents.

Accepted Answer

A) True 
 B)False

Question 19

When a taxpayer's income increases $1,000 and the taxes owed increases from $7,867 to $8,177, the marginal tax rate is ______ percent.

Accepted Answer

A)   15
B)   20
C)   25
D)   28
E)   31F) None of the above
G) C) and D)

Question 20

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) B) and C)
G) A) and C)

Exam 4: Planning Your Tax Strategy

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Correct AnswerverifiedShow Answer

A ______ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical and child care costs.

Correct AnswerverifiedShow Answer

The main purpose of taxes is to:

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

The principal purpose of taxes is to control economic conditions.

Correct AnswerverifiedShow Answer

A $2,000 deposit to a tax-deferred retirement account for a person in a 25 percent tax bracket would result in a reduced tax bill of:

Correct AnswerverifiedShow Answer

A person's filing status is affected by marital status and dependents.

Correct AnswerverifiedShow Answer

An exemption affects a person's tax situation by:

Correct AnswerverifiedShow Answer

Estimated quarterly tax payments must be made by people who:

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

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

Correct AnswerverifiedShow Answer

When a taxpayer's income increases $1,000 and the taxes owed increases from $7,867 to $8,177, the marginal tax rate is ______ percent.

Correct AnswerverifiedShow Answer

Tax avoidance refers to illegal actions to reduce one's taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Tax evasion is the use of illegal actions to reduce one's taxes.

Correct AnswerverifiedShow Answer

Union dues, fees for tax return preparation, and other miscellaneous expenses are:

Correct AnswerverifiedShow Answer

How is taxable income computed?

Correct AnswerverifiedShow Answer

A state may impose a personal property 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 and does not itemize deductions?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified