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Exam 3: Taxes in Your Financial Plan

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Question 51

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Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?

A) Add his tax-exempt income.
B) Subtract his itemized deductions.
C) Add his tax credits.
D) Subtract his tax-exempt income.
E) Add his tax exemptions.

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Question 52

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The itemized deduction allowed for an individual 65 and older is higher than the itemized deduction for a younger taxpayer.

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Question 53

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Fees, tips, and bonuses are forms of

An example of an excise tax is Social Security.

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?

Annie was required to clarify or document minor questions about her tax form by a mail inquiry. She participated in a(n)

A person with taxable income of $40,000 and a total tax bill of $4,200 would have an average tax rate of 15%.

Connie thinks that her salary and tax rate for next year will be lower than for this year. What step should she take to minimize her taxes in the current year?

Income that is taxed at a later date is

When calculating federal income taxes, what increases "gross income"?

Interest paid on a home equity loan is not deductible.

Using the following table, calculate the taxes for an individual with taxable income of $45,000. $\begin{array} { l r } 10 \% & \text { Up to } \$ 8,500 \\15 \% & \$ 8,500 - \$ 34,500 \\25 \% & \$ 34,500 - \$ 83,600 \\28 \% & \$ 83,600 - \$ 174,400 \\33 \% & \$ 174,400 - \$ 379,150 \\35 \% & \text { Over } \$ 379,150\end{array}$

When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.

Amounts given for tuition payments or medical expenses are not subject to gift taxes.

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.

The maximum that an individual can contribute to a Coverdell Education Savings Account each year is

Taxes on earnings that fund old age, survivor, and disability insurance benefits are called

One of the most frequent filing errors is signing the return.

Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?

An advantage of investing in a 401(k) plan is the