Exam 4: Using Tax Concepts for Planning

There is no Social Security tax on income beyond a certain level.

When you own a house as a primary residence

List your income,deductions,adjusted gross income,number of exemptions at $3,000 each,and itemized deductions or a standard deduction of $5,000 to arrive at taxable income.If you would like,make up an example if you don't want to supply your own figures.Justify the number of exemptions.

Which of the following is not a tax filing status option?

If you were to receive $100,000 from a corporation,the most tax-efficient way to receive it would be as

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 have a salary of $30,000,an IRA deduction of $2,000,a standard deduction of $4,400,and a FICA rate of 7.65 percent,how much did you pay in FICA this year?

Ralph and Josee have adjusted gross income of $53,000.They have itemized deductions of $18,000 and incurred $2,000 in college expenses for their daughter who is a freshman at a local community college.They file jointly and have three exemptions at $3,200 each.Compute their tax liability for the current year.

________ are specific expenses instead of a standard amount that reduce adjusted gross income.

Taxpayers can have more than the minimum amount of required income tax withheld from each pay.

You should claim itemized deductions if

The government usually adjusts the exemptions and standard deductions amounts annually to account for inflation.

All medical expenses may be deducted from income as long as you have the receipts or can show proof of payment.

Comment on a large tax refund.Is it a good use of your funds considering present value concepts? Does the government pay you interest? What can you do to change your withholding or recalculate it?

An earned income credit is a special credit that reduces the amount of taxes owed by taxpayers who earn high incomes.

Different tax rates are associated with each filing status such as single,married filing jointly,and head of household.

To qualify for "head of household" you must

Jerry is divorced and has two children that live with him.What filing status should Jerry claim on his tax return?

The Tax Relief Act of 2001 provided educational incentives to a broad range of taxpayers and reduced contribution limits to retirement plans.

A personal exemption can be claimed for the person filing a tax return,for a spouse,and for each dependent.