Question 1

Capital gains refer to profits from the sale of investments.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  passive
B)  capital gain
C)  portfolio
D)  earned
E)  excluded

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The principal purpose of taxes is to control economic conditions.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  credit
B)  exemption
C)  deduction
D)  exclusion
E)  shelter

Question 6

Not included in the recent tax credits is a/an _______________ tax credit.

Accepted Answer

A)  energy-saving
B)  adoption
C)  elderly and disabled
D)  credit card
E)  retirement savings

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

Joan Sanchez is single and earns $40,000 in taxable income.She uses the following tax rate schedule to calculate the taxes she owes. 
What is Joan's marginal tax rate?

Accepted Answer

A)  10%
B)  15%
C)  25%
D)  28%
E)  between 10% and 15%

Question 9

A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent.

Accepted Answer

A)  8.6
B)  10.3
C)  12.3
D)  14.2
E)  16.7

Question 10

Which of the following would result in a reduction of taxable income?

Accepted Answer

A)  portfolio income
B)  tax credits
C)  exclusions
D)  passive income
E)  earned income

Question 11

A traditional IRA,Keogh plan,and 401(k) plan are examples of:

Accepted Answer

A)  tax-exempt retirement plans.
B)  tax-deferred retirement plans.
C)  capital gains.
D)  self-employment insurance programs.
E)  job-related expenses that are tax deductiblE.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

A deduction from adjusted gross income for yourself,your spouse,and qualified dependents is:

Accepted Answer

A)  the standard deduction.
B)  a tax credit.
C)  an itemized deduction.
D)  an exclusion.
E)  an exemption.

Question 14

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 widower

Question 15

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.

Question 16

The Form 1040 is most helpful to a person who:

Accepted Answer

A)  is single with no other exemptions.
B)  makes less than $50,000 with no interest or dividends.
C)  itemizes deductions.
D)  has exempt income.
E)  has a simple tax situation.

Question 17

Taxes are only considered as financial planning activities in April.

Accepted Answer

A) True 
 B)False

Question 18

For which of the following types of credit plans is the interest tax deductible?

Accepted Answer

A)  home equity loan
B)  auto loan
C)  credit card
D)  life insurance policy cash value loan
E)  personal cash loan from a credit union

Question 19

Kelly Vernon wants her tax return prepared by a government approved tax expert.Which of the following tax preparers should Kelly use?

Accepted Answer

A)  CPA
B)  enrolled agent
C)  nationally-certified tax preparer
D)  tax attorney
E)  local tax preparer

Question 20

Which one of these statements correctly applies to a Roth IRA?

Accepted Answer

A)  earnings on the account are tax-free after five years
B)  annual contributions may exceed $2,000
C)  deposits must be in federally-insured accounts
D)  funds are only to be used for educational expenses
E)  only self-employed workers can contribute to a Roth

Exam 4: Planning Your Tax Strategy

A deduction from adjusted gross income for yourself,your spouse,and qualified dependents is:

Correct AnswerverifiedShow Answer

For which of the following types of credit plans is the interest tax deductible?

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A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent.

Correct AnswerverifiedShow Answer

Not included in the recent tax credits is a/an _______________ tax credit.

Correct AnswerverifiedShow Answer

Which one of these statements correctly applies to a Roth IRA?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Capital gains refer to profits from the sale of investments.

Correct AnswerverifiedShow Answer

Taxes are only considered as financial planning activities in April.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Kelly Vernon wants her tax return prepared by a government approved tax expert.Which of the following tax preparers should Kelly use?

Correct AnswerverifiedShow Answer

Which of the following would result in a reduction of taxable income?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The principal purpose of taxes is to control economic conditions.

Correct AnswerverifiedShow Answer

A traditional IRA,Keogh plan,and 401(k) plan are examples of:

Correct AnswerverifiedShow Answer

Joan Sanchez is single and earns $40,000 in taxable income.She uses the following tax rate schedule to calculate the taxes she owes. What is Joan's marginal tax rate?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Form 1040 is most helpful to a person who:

Correct AnswerverifiedShow Answer

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