Exam 3: Preparing Your Taxes

John and Charlotte are considering contributing $1,000 to their church.This contribution will bring their total itemized deductions to $2,000.Assuming they are in the 15% marginal tax bracket,how much will they save in taxes by contributing this $1,000 to their church?

Maria and Ed just sold their home of 20 years so that they could purchase a smaller home.They realized a $400,000 capital gain on the home.How much of this gain will Maria and Ed have to pay taxes on?

Jackson is a 25 year old college student whose parents contribute to his support.His parents may claim him as a tax dependent in 2011 as long as

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[All | Some] of your medical expenses during the year could be taken as an itemized deduction.

The total amount that you owe for income tax in one year is your tax

Which of the following are legal methods of reducing your current tax liability?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Tax [avoidance | evasion] involves failure to accurately report income or deductions,and,in extreme cases,a failure to pay taxes altogether.

Your marital status will affect the amount of social security you must pay in a year.

All taxpayers have an equal probability of having their tax returns audited.

A couple will usually incur a lower tax liability if they choose "married,filing jointly" rather than "married,filing a separately."

Henry is married to Lillian,and they have two dependent children.Henry can legally file using which of the following filing statuses?

Hector is a single taxpayer in the 28% marginal tax bracket.In 2011,he sold stock shares for a long-term capital gain of $8,500.He also sold some financial services stock for a long-term capital loss of $2,000.In addition,he sold the home that he had lived in for the past 3 years and experienced a $15,000 gain on the house.How much will his net capital gains (or losses)be for 2011? How much will he pay (or save)in taxes as a result of these transactions?

A short-term capital gain would be taxed at the same rate as your salary.

For tax purposes,head-of-household refers to

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -When one gives a child an income producing asset,one is [maximizing their deductions | income shifting].

Over 75% of the revenue received by the federal government is from ____ and ____ taxes.

Gross income minus tax exempt income equals adjusted gross income.

Russ and Lois got married December 30.Since they were single for most of the year,however,they can legally file as married taxpayers in the year of the wedding.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The major source of revenue for the federal government is [income | Social Security] taxes.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -A special tax provision reduced the social security portion for the individual taxpayer in 2011 and 2012 from [6.2% to 4.2% | 4.2% to 2.2%].