Question 1

Which of the following taxes is only paid on the first $102,000 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 2

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

Accepted Answer

This is a subjective question.Taxes redu

Question 3

Knowledge of tax laws can help you conserve your income.

Accepted Answer

A) True 
 B)False

Question 4

All interest and dividends received by an individual taxpayer are taxable.

Accepted Answer

A) True 
 B)False

Question 5

Legal methods of reducing your taxes include all of the following except

Accepted Answer

A) organizing your records to track appropriate expenses and contributions. 
B) preparing your return early in the year so you are not rushed. 
C) seeking the advice of an accountant. 
D) overstating cash contributions to Salvation Army Christmas kettles. 
A) organizing your records to track appropriate expenses and contributions. 
B) preparing your return early in the year so you are not rushed. 
C) seeking the advice of an accountant. 
D) overstating cash contributions to Salvation Army Christmas kettles.

Question 6

Purchasing which of the following items on credit will help reduce your tax bill?

Accepted Answer

A) Automobile 
B) Home 
C) Stereo 
D) Boat 
A) Automobile 
B) Home 
C) Stereo 
D) Boat

Question 7

All taxpayers have a large degree of freedom in choosing their filing status.

Accepted Answer

A) True 
 B)False

Question 8

If you sell an asset that you owned for less than 12 months for more than you paid for it,you will report a(n)________.

Accepted Answer

short-term

Question 9

Under the Tax Relief Act of 2003,the lowest tax bracket for single taxpayers earning $8,000 or less is 15 percent.

Accepted Answer

A) True 
 B)False

Question 10

Which item below cannot be taken as an itemized deduction?

Accepted Answer

A) Medical expenses 
B) Charitable contributions 
C) Child and dependent care expenses 
D) Real estate taxes 
A) Medical expenses 
B) Charitable contributions 
C) Child and dependent care expenses 
D) Real estate taxes

Question 11

FICA taxes include two components,which consist of

Accepted Answer

A) accident and disability insurance. 
B) unemployment compensation and disability insurance. 
C) retirement and Medicare contributions. 
D) old age and unemployment compensation. 
A) accident and disability insurance. 
B) unemployment compensation and disability insurance. 
C) retirement and Medicare contributions. 
D) old age and unemployment compensation.

Question 12

A young couple buying a home would usually be better off to take the standard deduction rather than itemizing deductions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is the correct method for starting with gross income and computing taxable income?

Accepted Answer

A) Subtract the standard deduction and exemptions 
B) Add the itemized deductions and subtract the exemptions 
C) Subtract IRA contributions and add exemptions 
D) Subtract adjustments,deductions,and exemptions 
A) Subtract the standard deduction and exemptions 
B) Add the itemized deductions and subtract the exemptions 
C) Subtract IRA contributions and add exemptions 
D) Subtract adjustments,deductions,and exemptions

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

Question 15

For qualified individuals,a contribution to a traditional IRA (Individual Retirement Account)is a(n)

Accepted Answer

A) credit. 
B) adjustment to gross income. 
C) itemized expense. 
D) additional exemption amount. 
A) credit. 
B) adjustment to gross income. 
C) itemized expense. 
D) additional exemption amount.

Question 16

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 17

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following can be deducted from your taxes even if you do not itemize?

Accepted Answer

A) Mortgage interest expense 
B) Real estate taxes 
C) State income taxes 
D) Student loan interest 
A) Mortgage interest expense 
B) Real estate taxes 
C) State income taxes 
D) Student loan interest

Question 19

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 20

The knowledge of tax laws can help you

Accepted Answer

A) conserve your income. 
B) enhance your investments. 
C) protect the transfer of your wealth at your death. 
D) All of the above. 
A) conserve your income. 
B) enhance your investments. 
C) protect the transfer of your wealth at your death. 
D) All of the above.

Exam 4: Using Tax Concepts for Planning

Which of the following taxes is only paid on the first $102,000 of your salary?

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

Knowledge of tax laws can help you conserve your income.

All interest and dividends received by an individual taxpayer are taxable.

Legal methods of reducing your taxes include all of the following except

Purchasing which of the following items on credit will help reduce your tax bill?

All taxpayers have a large degree of freedom in choosing their filing status.

If you sell an asset that you owned for less than 12 months for more than you paid for it,you will report a(n)________.

Under the Tax Relief Act of 2003,the lowest tax bracket for single taxpayers earning $8,000 or less is 15 percent.

Which item below cannot be taken as an itemized deduction?

FICA taxes include two components,which consist of

A young couple buying a home would usually be better off to take the standard deduction rather than itemizing deductions.

Which of the following is the correct method for starting with gross income and computing taxable income?

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

For qualified individuals,a contribution to a traditional IRA (Individual Retirement Account)is a(n)

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

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

Which of the following can be deducted from your taxes even if you do not itemize?

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

The knowledge of tax laws can help you

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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