Question 1

Describe how taxes affect your personal budget, income statement, and balance sheet.

Accepted Answer

This is a subjective question. Taxes reduce wealth or income. However, some deductions are allowed for expenses such as home mortgage interest and real estate taxes that the government uses to encourage certain activities. Tax planning helps minimize taxes through retirement planning and purchases.

Question 2

Which of the following statements is not true regarding FICA taxes paid?

Accepted Answer

A)   These taxes fund both Social Security and Medicare.
B)   Employers are required to match employee FICA contributions.
C)   All FICA taxes apply to your total income.
D)   There is a limit on how much of your income will be taxed for Social Security.E) B) and C)
F) A) and C)

Question 3

Medicare is a government health insurance program that covers people over age 55 and provides payments to health care providers in case of illness.

Accepted Answer

A) True 
 B)False

Question 4

If you are paying taxes at the 35% tax bracket, you should

Accepted Answer

A)   consider investing in tax free municipal bonds.
B)   make the maximum tax-deductible contribution to your company 401K.
C)   increase the interest expenses you pay by taking loans on expensive autos instead of paying cash.
D)   Both A and B are correct.E) None of the above
F) All of the above

Question 5

When calculating taxable income, you are allowed to reduce income by a standard deduction or itemized list of deductions.

Accepted Answer

A) True 
 B)False

Question 6

Melanie and Jim, homeowners, have mortgage interest of $13,000, real estate taxes of $10,000, and charitable contributions of $1500. According to their filing status, a standard deduction of $24,000 is allowed. How much should the couple deduct on their tax return?

Accepted Answer

A)   $25,000
B)   $24,000
C)   $24,500
D)   $7,700E) B) and C)
F) A) and D)

Question 7

For 2018, only medical expenses above 7.5% of adjusted gross income are deductible when itemizing deduction.

Accepted Answer

A) True 
 B)False  True

Question 8

Which of the following is not includable in gross income for Federal income tax purposes?

Accepted Answer

A)   Sales commissions
B)   Cash you receive for painting your neighbor's house
C)   Qualifying dividends
D)   Municipal bond interestE) C) and D)
F) B) and D)

Question 9

If you are a surviving spouse, you may continue to use the head of household tax rates unless

Accepted Answer

A)   you are divorced and your ex-spouse died in the last five years.
B)   your spouse died in the last two years.
C)   you have children you can claim as dependents.
D)   you pay more than half the cost of maintaining your residence.E) A) and C)
F) A) and B)

Question 10

Capital gains occur when

Accepted Answer

A)   you sell your home for more than you paid.
B)   you sell your family car for more than you paid.
C)   you sell investment assets for more than you paid.
D)   Both A and C are correct.E) B) and C)
F) A) and C) C

Question 11

Which of the following gross income is not taxable income?

Accepted Answer

A)   Health insurance reimbursements
B)   Interest income
C)   Dividends
D)   Tips receivedE) A) and D)
F) A) and C)

Question 12

If you have a salary of $30,000, an IRA deduction of $2,000, a standard deduction of $12,000, and a FICA rate of 7.65 percent, how much did you pay in FICA taxes this year?

Accepted Answer

A)   $1,805
B)   $1,958
C)   $2,142
D)   $2,295E) A) and D)
F) All of the above

Question 13

Tax brackets are income levels that have different tax rates.

Accepted Answer

A) True 
 B)False

Question 14

If you are a married taxpayer, you may use the ________ filing status.

Accepted Answer

A)   single
B)   married filing jointly or married filing separately
C)   head of household
D)   Any of the above may be used.E) A) and B)
F) A) and C)

Question 15

Which of the following taxes is only paid on the first $128,400 of your salary?

Accepted Answer

A)   Federal Income Tax
B)   Social Security Tax
C)   Medicare Tax
D)   All of the aboveE) A) and D)
F) A) and C)

Question 16

Lucky Louie earned a salary of $100,000 this year and interest income of $3,000. Louie, was not so lucky in the stock market however and had capital losses of $3,000. What was Lucky Louie's taxable income, assuming Louie takes the standard $12,000 deduction?

Accepted Answer

A)   $88,000
B)   $81,000
C)   $89,000
D)   $90,000E) B) and C)
F) A) and B)

Question 17

Determining taxes requires you to address all of the following topics, except

Accepted Answer

A)   gross income.
B)   daily living expenses.
C)   deductions.
D)   exemptions.E) A) and D)
F) B) and C)

Question 18

State and local tax deductions are now limited to

Accepted Answer

A)   $5000.
B)   $10,000.
C)   $12,500.
D)   This deduction is unlimited.E) None of the above
F) B) and C)

Question 19

In order to claim a tax deduction for a charitable contribution, you must be

Accepted Answer

A)   over 21 years of age.
B)   earning more than $50,000 per year.
C)   itemizing deductions on your income tax return.
D)   in at least the 25% tax bracket.E) A) and B)
F) B) and D)

Question 20

The Tax Cuts and Jobs Act of 2017 changed the standard deduction for married taxpayers filing joint returns to $24,000.

Accepted Answer

A) True 
 B)False

Exam 4: Using Tax Concepts for Planning

Describe how taxes affect your personal budget, income statement, and balance sheet.

Which of the following statements is not true regarding FICA taxes paid?

Correct Answer
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Medicare is a government health insurance program that covers people over age 55 and provides payments to health care providers in case of illness.

Correct Answer
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If you are paying taxes at the 35% tax bracket, you should

Correct Answer
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When calculating taxable income, you are allowed to reduce income by a standard deduction or itemized list of deductions.

Correct Answer
verified

Melanie and Jim, homeowners, have mortgage interest of $13,000, real estate taxes of $10,000, and charitable contributions of $1500. According to their filing status, a standard deduction of $24,000 is allowed. How much should the couple deduct on their tax return?

Correct Answer
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For 2018, only medical expenses above 7.5% of adjusted gross income are deductible when itemizing deduction.

Correct Answer
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True

Which of the following is not includable in gross income for Federal income tax purposes?

Correct Answer
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If you are a surviving spouse, you may continue to use the head of household tax rates unless

Correct Answer
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Capital gains occur when

Correct Answer
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C

Which of the following gross income is not taxable income?

Correct Answer
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If you have a salary of $30,000, an IRA deduction of $2,000, a standard deduction of $12,000, and a FICA rate of 7.65 percent, how much did you pay in FICA taxes this year?

Correct Answer
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Tax brackets are income levels that have different tax rates.

Correct Answer
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If you are a married taxpayer, you may use the ________ filing status.

Correct Answer
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Which of the following taxes is only paid on the first $128,400 of your salary?

Correct Answer
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Lucky Louie earned a salary of $100,000 this year and interest income of $3,000. Louie, was not so lucky in the stock market however and had capital losses of $3,000. What was Lucky Louie's taxable income, assuming Louie takes the standard $12,000 deduction?

Correct Answer
verified

Determining taxes requires you to address all of the following topics, except

Correct Answer
verified

State and local tax deductions are now limited to

Correct Answer
verified

In order to claim a tax deduction for a charitable contribution, you must be

Correct Answer
verified

The Tax Cuts and Jobs Act of 2017 changed the standard deduction for married taxpayers filing joint returns to $24,000.

Correct Answer
verified

Exam 4: Using Tax Concepts for Planning

Describe how taxes affect your personal budget, income statement, and balance sheet.

Which of the following statements is not true regarding FICA taxes paid?

Correct AnswerverifiedShow Answer

Medicare is a government health insurance program that covers people over age 55 and provides payments to health care providers in case of illness.

Correct AnswerverifiedShow Answer

If you are paying taxes at the 35% tax bracket, you should

Correct AnswerverifiedShow Answer

When calculating taxable income, you are allowed to reduce income by a standard deduction or itemized list of deductions.

Correct AnswerverifiedShow Answer

Melanie and Jim, homeowners, have mortgage interest of $13,000, real estate taxes of $10,000, and charitable contributions of $1500. According to their filing status, a standard deduction of $24,000 is allowed. How much should the couple deduct on their tax return?

Correct AnswerverifiedShow Answer

For 2018, only medical expenses above 7.5% of adjusted gross income are deductible when itemizing deduction.

Correct AnswerverifiedTrue

Which of the following is not includable in gross income for Federal income tax purposes?

Correct AnswerverifiedShow Answer

If you are a surviving spouse, you may continue to use the head of household tax rates unless

Correct AnswerverifiedShow Answer

Capital gains occur when

Correct AnswerverifiedC

Which of the following gross income is not taxable income?

Correct AnswerverifiedShow Answer

If you have a salary of $30,000, an IRA deduction of $2,000, a standard deduction of $12,000, and a FICA rate of 7.65 percent, how much did you pay in FICA taxes this year?

Correct AnswerverifiedShow Answer

Tax brackets are income levels that have different tax rates.

Correct AnswerverifiedShow Answer

If you are a married taxpayer, you may use the ________ filing status.

Correct AnswerverifiedShow Answer

Which of the following taxes is only paid on the first $128,400 of your salary?

Correct AnswerverifiedShow Answer

Lucky Louie earned a salary of $100,000 this year and interest income of $3,000. Louie, was not so lucky in the stock market however and had capital losses of $3,000. What was Lucky Louie's taxable income, assuming Louie takes the standard $12,000 deduction?

Correct AnswerverifiedShow Answer

Determining taxes requires you to address all of the following topics, except

Correct AnswerverifiedShow Answer

State and local tax deductions are now limited to

Correct AnswerverifiedShow Answer

In order to claim a tax deduction for a charitable contribution, you must be

Correct AnswerverifiedShow Answer

The Tax Cuts and Jobs Act of 2017 changed the standard deduction for married taxpayers filing joint returns to $24,000.

Correct AnswerverifiedShow Answer

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True

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C

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