Question 1

Dwayne and Gayle were divorced on September 29. They have not remarried since and have no dependents. Their filing status for the year will be married filing separately since they were married for more than half of the year.

Accepted Answer

A) True 
 B)False

Question 2

Itemized deductions are listed on:

Accepted Answer

A)  Schedule A of Form 1040.
B)  Schedule B of Form 1040.
C)  Schedule C of Form 1040.
D)  Schedule D of Form 1040.
E)  Schedule F of Form 1040.

Question 3

The alternative minimum tax (AMT)is applicable to taxpayers with moderate levels of income only.

Accepted Answer

A) True 
 B)False

Question 4

A tax audit is a(n) :

Accepted Answer

A)  Internal Revenue Service (IRS) revision of a previously filed return.
B)  Internal Revenue Service (IRS) attempt to verify the accuracy of a return.
C)  Internal Revenue Service (IRS) charge of illegal action.
D)  U.S. Tax Court action.
E)  U.S. Tax Court decision.

Question 5

A tax audit is an examination by local government officials to identify people who do not pay enough taxes.

Accepted Answer

A) True 
 B)False

Question 6

A taxpayer can file for an automatic extension of _____ months.

Accepted Answer

A)  2
B)  4
C)  6
D)  9
E)  12

Question 7

If you are a professional who is likely to receive income that is not subject to withholding, then you are required to:

Accepted Answer

A)  pay an estimated tax.
B)  file an amended return.
C)  file an extension.
D)  deduct a tax credit.
E)  calculate itemized deductions.

Question 8

If you are legally separated from your spouse by a separation decree, you can legally file as a single taxpayer.

Accepted Answer

A) True 
 B)False

Question 9

Adjustments to gross income will decrease your taxable income.

Accepted Answer

A) True 
 B)False

Question 10

Mandi and Thomas were married and had a child aged 7 in 2018. Mandi died in 2018, leaving Thomas a single parent. The most favorable filing status for Thomas in 2019 will be:

Accepted Answer

A)  single.
B)  married filing separately.
C)  head of household.
D)  qualifying widower.
E)  married filing jointly.

Question 11

Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gains from the sale were $40,000. Melinda's tax liability on the gain is:

Accepted Answer

A)  $10,500.
B)  $8,400.
C)  $6,000.
D)  $4,500.
E)  $1,500.

Question 12

For those under the age of 65, medical and dental expenses may be included as itemized deductions:

Accepted Answer

A)  when they exceed 4% of the adjusted gross income.
B)  up to a maximum of $7,500 per individual per tax year.
C)  only if they are less than 20% of the gross income.
D)  only for amounts in excess of 10% of the adjusted gross income.
E)  when they exceed 2% of the taxable income.

Question 13

A declaration of estimated taxes is made on:

Accepted Answer

A)  Schedule B.
B)  Form 1040EZ.
C)  Schedule Z.
D)  Form 1040-ES.
E)  Form 1040A.

Question 14

Shawn earns $65,000. If the total Social Security tax rate is 15.3%, how much is his Social Security tax? How much does his employer pay toward Social Security taxes for Shawn? (Show all work and round to the nearest dollar.)

Accepted Answer

Shawn's Social Security Tax = ...

Question 15

Tom sold mutual fund shares, which he had owned for 3 years, so that he could use the proceeds to return to college. Tom is in the 12% marginal tax bracket, and his capital gain from the sale was $12,000. How much tax does Tom owe on the gain?

Accepted Answer

A)  $12,000
B)  $3,080
C)  $1,440
D)  $1,200
E)  $0

Question 16

A progressive tax structure is one in which:

Accepted Answer

A)  tax rates are directly proportional to inflation rates.
B)  the larger the amount of taxable income, the higher the rate at which it is taxed.
C)  tax rates are inversely related to inflation rates.
D)  everyone pays the same income tax rate.
E)  no exemptions or deductions are available.

Question 17

You would typically include _____ in your gross income.

Accepted Answer

A)  child-support payments
B)  life insurance death benefit payments
C)  municipal bond interest
D)  income from pensions
E)  personal exemptions

Question 18

Tax credits reduce your:

Accepted Answer

A)  tax liability.
B)  adjusted gross income.
C)  tax refund.
D)  tax withholding.
E)  taxable income.

Question 19

Jamil and Vicki have one child, aged 3. How much will a tax credit reduce their tax liability?

Accepted Answer

A)  $500
B)  $1,000
C)  $2,000
D)  $2,500
E)  $3,000

Question 20

Ben and Jack both earned $60,000 this year. Ben (age 30) is married with two children, and Jack (age 68) is single with no dependents. Which of the following is true regarding the amount of Social Security taxes they will have to pay?

Accepted Answer

A)  They will pay the same amount of Social Security taxes.
B)  Ben will pay less Social Security taxes because he is married.
C)  Ben will pay less Social Security taxes because he has children.
D)  Jack will pay less Social Security taxes because he is single.
E)  Jack will pay less Social Security taxes because he is over the age of 65.

Exam 3: Preparing Your Taxes

If you are legally separated from your spouse by a separation decree, you can legally file as a single taxpayer.

Correct AnswerverifiedShow Answer

Shawn earns $65,000. If the total Social Security tax rate is 15.3%, how much is his Social Security tax? How much does his employer pay toward Social Security taxes for Shawn? (Show all work and round to the nearest dollar.)

Correct AnswerverifiedShawn's Social Security Tax = ...View AnswerShow Answer

A progressive tax structure is one in which:

Correct AnswerverifiedShow Answer

Ben and Jack both earned $60,000 this year. Ben (age 30) is married with two children, and Jack (age 68) is single with no dependents. Which of the following is true regarding the amount of Social Security taxes they will have to pay?

Correct AnswerverifiedShow Answer

A tax audit is an examination by local government officials to identify people who do not pay enough taxes.

Correct AnswerverifiedShow Answer

Tax credits reduce your:

Correct AnswerverifiedShow Answer

A taxpayer can file for an automatic extension of _____ months.

Correct AnswerverifiedShow Answer

A tax audit is a(n) :

Correct AnswerverifiedShow Answer

Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gains from the sale were $40,000. Melinda's tax liability on the gain is:

Correct AnswerverifiedShow Answer

If you are a professional who is likely to receive income that is not subject to withholding, then you are required to:

Correct AnswerverifiedShow Answer

Tom sold mutual fund shares, which he had owned for 3 years, so that he could use the proceeds to return to college. Tom is in the 12% marginal tax bracket, and his capital gain from the sale was $12,000. How much tax does Tom owe on the gain?

Correct AnswerverifiedShow Answer

Adjustments to gross income will decrease your taxable income.

Correct AnswerverifiedShow Answer

Jamil and Vicki have one child, aged 3. How much will a tax credit reduce their tax liability?

Correct AnswerverifiedShow Answer

Itemized deductions are listed on:

Correct AnswerverifiedShow Answer

The alternative minimum tax (AMT)is applicable to taxpayers with moderate levels of income only.

Correct AnswerverifiedShow Answer

You would typically include _____ in your gross income.

Correct AnswerverifiedShow Answer

A declaration of estimated taxes is made on:

Correct AnswerverifiedShow Answer

Dwayne and Gayle were divorced on September 29. They have not remarried since and have no dependents. Their filing status for the year will be married filing separately since they were married for more than half of the year.

Correct AnswerverifiedShow Answer

For those under the age of 65, medical and dental expenses may be included as itemized deductions:

Correct AnswerverifiedShow Answer

Mandi and Thomas were married and had a child aged 7 in 2018. Mandi died in 2018, leaving Thomas a single parent. The most favorable filing status for Thomas in 2019 will be:

Correct AnswerverifiedShow Answer

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Shawn's Social Security Tax = ...
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