Question 1

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

Accepted Answer

A)   Exemptions
B)   Exclusions
C)   Itemized deductions
D)   Tax credits
E)   Passive incomeF) A) and B)
G) A) and C)

Question 2

A taxpayer whose spouse recently died is most likely to use the ____________ filing status.

Accepted Answer

A)   single
B)   married filing joint return
C)   married filing separate return
D)   head of household
E)   qualifying widow or widowerF) A) and D)
G) All of the above

Question 3

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) A) and C)
G) D) and E)

Question 4

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) A) and B)
G) A) and E)

Question 5

Which of the following good(s)  or service(s)  are subject to an excise tax?

Accepted Answer

A)   Gasoline
B)   Tires
C)   Cigarettes
D)   Air travel
E)   All of theseF) A) and E)
G) B) and C)

Question 6

Money received in the form of dividends or interest is commonly called "earned income."

Accepted Answer

A) True 
 B)False

Question 7

Explain the difference between a short-term capital gain and a long-term capital gain.

Accepted Answer

The answer of Explain the difference between a short-term capital...

Question 8

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes. 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) None of the above
G) All of the above

Question 9

Alex Bates goes on Jeopardy and earns $875,000 in winnings. What type of income is this?

Accepted Answer

A)   Earned income
B)   Investment income
C)   Passive income
D)   Other income
E)   Deferred incomeF) A) and B)
G) C) and E)

Question 10

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) D) and E)
G) C) and D)

Question 11

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 deduct from adjusted gross income?

Accepted Answer

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

Question 12

Mary Watson bought 20 shares of stock one and half years ago. She recently sold her stock making a profit of $1,400. She is in the 28% tax bracket. Her tax on this investment is:

Accepted Answer

A)   $140.
B)   $210.
C)   $280.
D)   $392.
E)   $462.F) B) and D)
G) C) and D)

Question 13

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

Accepted Answer

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

Question 14

Randal Ice is 57 years old, and has adjusted gross income of $32,000. He has medical expenses for the year of $6,000. How much of these expenses can he deduct from adjusted gross income?

Accepted Answer

A)   $0
B)   $2,400
C)   $2,800
D)   $3,600
E)   $4,500F) C) and D)
G) A) and C)

Question 15

Taxes are only considered as financial planning activities in April.

Accepted Answer

A) True 
 B)False

Question 16

George Washburn had earnings from his salary of $34,000, interest on savings of $800, a contribution to a traditional individual retirement account of $1,500, and dividends from mutual funds of $600. George's adjusted income (AGI)  would be:

Accepted Answer

A)   $33,900.
B)   $34,000.
C)   $34,600.
D)   $34,800.
E)   $35,400.F) A) and C)
G) A) and D)

Question 17

Thomas Franklin claimed an additional $3,000 in deductions he knowingly knew he did not qualify for so he could reduce his tax bill. This is referred to as tax:

Accepted Answer

A)   avoidance.
B)   acceleration.
C)   evasion.
D)   delaying.
E)   deferment.F) A) and D)
G) A) and E)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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) D) and E)
G) B) and D)

Question 20

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...

Exam 4: Planning Your Tax Strategy

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes. What type of tax is this most likely to be?

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

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

Correct AnswerverifiedShow Answer

George Washburn had earnings from his salary of $34,000, interest on savings of $800, a contribution to a traditional individual retirement account of $1,500, and dividends from mutual funds of $600. George's adjusted income (AGI) would be:

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Tax-deferred retirement plans are a type of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Explain the difference between a short-term capital gain and a long-term capital gain.

Correct AnswerverifiedShow Answer

Randal Ice is 57 years old, and has adjusted gross income of $32,000. He has medical expenses for the year of $6,000. How much of these expenses can he deduct from adjusted gross income?

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

Alex Bates goes on Jeopardy and earns $875,000 in winnings. What type of income is this?

Correct AnswerverifiedShow Answer

Taxes are only considered as financial planning activities in April.

Correct AnswerverifiedShow Answer

Money received in the form of dividends or interest is commonly called "earned income."

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 deduct from adjusted gross income?

Correct AnswerverifiedShow Answer

Thomas Franklin claimed an additional $3,000 in deductions he knowingly knew he did not qualify for so he could reduce his tax bill. This is referred to as tax:

Correct AnswerverifiedShow Answer

Which of the following good(s) or service(s) are subject to an excise tax?

Correct AnswerverifiedShow Answer

A taxpayer whose spouse recently died is most likely to use the ____________ filing status.

Correct AnswerverifiedShow Answer

Mary Watson bought 20 shares of stock one and half years ago. She recently sold her stock making a profit of $1,400. She is in the 28% tax bracket. Her tax on this investment is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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