Question 1

A(n)________ offsets taxes by subtracting the full amount from the taxes owed.

Accepted Answer

The answer of A(n)________ offsets taxes by subtracting the full...

Question 2

________ is withheld at a rate of 6.2% on the first $102,000 of your earnings.

Accepted Answer

The answer of ________ is withheld at a rate of...

Question 3

________ and ________ are both reported on a Schedule B.

Accepted Answer

Interest i

Question 4

Gross income includes all of the following except

Accepted Answer

A) salary or wages. 
B) interest or dividends received. 
C) employer's current contribution to 401(k). 
D) capital gains realized. 
A) salary or wages. 
B) interest or dividends received. 
C) employer's current contribution to 401(k). 
D) capital gains realized.

Question 5

Your gross wages are subject to FICA (Federal Insurance Contributions Act)taxes that fund the Social Security system and Medicare.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a tax credit mentioned in the chapter?

Accepted Answer

A) Child tax credit 
B) Second income credit 
C) College expense credit 
D) Earned income credit 
A) Child tax credit 
B) Second income credit 
C) College expense credit 
D) Earned income credit

Question 7

Students and other taxpayers earning less than $100,000 a year with no dependents are eligible to file the simplest tax return,which is the 1040E-Z.

Accepted Answer

A) True 
 B)False

Question 8

Only the income that remains after deductions and exemptions are subtracted from adjusted gross income is taxable.

Accepted Answer

A) True 
 B)False

Question 9

The highest tax rate a taxpayer is charged on his or her federal tax return is called the ________ rate.

Accepted Answer

A) marginal 
B) average 
C) maximum 
D) true 
A) marginal 
B) average 
C) maximum 
D) true

Question 10

The standard deduction (assuming you are not over 65 or blind)is largest for

Accepted Answer

A) single filers. 
B) head of household filers. 
C) married filing jointly. 
D) married filing separately. 
A) single filers. 
B) head of household filers. 
C) married filing jointly. 
D) married filing separately.

Question 11

Tax credits amount to the same savings as tax deductions.

Accepted Answer

A) True 
 B)False

Question 12

Comment on your level of knowledge to prepare your taxes.Do you need to hire a CPA or can you prepare them? Are you going to invest in any software that helps you prepare your return?

Accepted Answer

You have the basic knowledge to prepare

Question 13

When taxable income exceeds certain levels,the itemized deductions and exemptions

Accepted Answer

A) are reduced. 
B) are limited but may be carried over to future years. 
C) reach a maximum allowable amount. 
D) increase in proportion to increases in taxable income. 
A) are reduced. 
B) are limited but may be carried over to future years. 
C) reach a maximum allowable amount. 
D) increase in proportion to increases in taxable income.

Question 14

If you are a surviving spouse,you may continue to use the married filing jointly 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 an exemption. 
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 an exemption. 
D) you pay more than half the cost of maintaining your residence.

Question 15

Income earned from the sale of an asset for more than you paid for it is classified as a(n)

Accepted Answer

A) dividend income. 
B) interest income. 
C) capital gain. 
D) windfall. 
A) dividend income. 
B) interest income. 
C) capital gain. 
D) windfall.

Question 16

The filing status that yields the largest standard deduction per taxpayer is

Accepted Answer

A) married,filing jointly. 
B) head of household. 
C) single individual. 
D) married,filing separately. 
A) married,filing jointly. 
B) head of household. 
C) single individual. 
D) married,filing separately.

Question 17

Gross income consists of all reportable income from any source.

Accepted Answer

A) True 
 B)False

Question 18

Reductions of gross income for such items as individual retirement accounts (IRAs),moving expenses,and student loan interest payments will result in

Accepted Answer

A) adjusted gross income. 
B) taxable income. 
C) earned income. 
D) passive income. 
A) adjusted gross income. 
B) taxable income. 
C) earned income. 
D) passive income.

Question 19

The key tax planning decisions in building your financial plan are knowing what tax savings are currently available to you and how you can increase your tax savings in the future.

Accepted Answer

A) True 
 B)False

Question 20

The standard deduction is smallest for

Accepted Answer

A) single filers,assuming under age 65. 
B) head of household filers,assuming over age 65 or blind. 
C) married filing separately,assuming over age 65 or blind. 
D) married filing jointly,assuming under age 65. 
A) single filers,assuming under age 65. 
B) head of household filers,assuming over age 65 or blind. 
C) married filing separately,assuming over age 65 or blind. 
D) married filing jointly,assuming under age 65.

Exam 4: Using Tax Concepts for Planning

A(n)________ offsets taxes by subtracting the full amount from the taxes owed.

________ is withheld at a rate of 6.2% on the first $102,000 of your earnings.

________ and ________ are both reported on a Schedule B.

Gross income includes all of the following except

Your gross wages are subject to FICA (Federal Insurance Contributions Act)taxes that fund the Social Security system and Medicare.

Which of the following is not a tax credit mentioned in the chapter?

Students and other taxpayers earning less than $100,000 a year with no dependents are eligible to file the simplest tax return,which is the 1040E-Z.

Only the income that remains after deductions and exemptions are subtracted from adjusted gross income is taxable.

The highest tax rate a taxpayer is charged on his or her federal tax return is called the ________ rate.

The standard deduction (assuming you are not over 65 or blind)is largest for

Tax credits amount to the same savings as tax deductions.

Comment on your level of knowledge to prepare your taxes.Do you need to hire a CPA or can you prepare them? Are you going to invest in any software that helps you prepare your return?

When taxable income exceeds certain levels,the itemized deductions and exemptions

If you are a surviving spouse,you may continue to use the married filing jointly tax rates unless

Income earned from the sale of an asset for more than you paid for it is classified as a(n)

The filing status that yields the largest standard deduction per taxpayer is

Gross income consists of all reportable income from any source.

Reductions of gross income for such items as individual retirement accounts (IRAs),moving expenses,and student loan interest payments will result in

The key tax planning decisions in building your financial plan are knowing what tax savings are currently available to you and how you can increase your tax savings in the future.

The standard deduction is smallest for

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

Filters

and are both reported on a Schedule B.