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

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 3

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. 
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. C

Question 4

Which of the following gross income is not taxable income?

Accepted Answer

A)  Health insurance reimbursements 
B)  Interest income 
C)  Dividends 
D)  Tips received 
A)  Health insurance reimbursements 
B)  Interest income 
C)  Dividends 
D)  Tips received

Question 5

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

Question 6

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. 
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.

Question 7

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

Question 8

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. 
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.

Question 9

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 10

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. 
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.

Question 11

Tax brackets are income levels that have different tax rates.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

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)  $2,295 
A)  $1,805 
B)  $1,958 
C)  $2,142 
D)  $2,295

Question 14

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

Question 15

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

Question 16

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 17

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. 
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.

Question 18

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 above 
A)  Federal Income Tax 
B)  Social Security Tax 
C)  Medicare Tax 
D)  All of the above

Question 19

State and local tax deductions are now limited to

Accepted Answer

A)  $5000. 
B)  $10,000. 
C)  $12,500. 
D)  This deduction is unlimited. 
A)  $5000. 
B)  $10,000. 
C)  $12,500. 
D)  This deduction is unlimited.

Question 20

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

Exam 4: Using Tax Concepts for Planning

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

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

Capital gains occur when

Which of the following gross income is not taxable income?

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

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

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

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

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

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

Tax brackets are income levels that have different tax rates.

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

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?

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

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?

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

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

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

State and local tax deductions are now limited to

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?

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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