Exam 4: Using Tax Concepts for Planning

Knowledge of individual income taxes is crucial to sound financial planning.

A standard amount which taxpayers can claim for themselves and dependents is called a(n)

Employers have an option of whether or not to match an employee's Social Security and Medicare taxes.

The timing on the sale of an investment asset earning a capital gain makes little or no difference in the amount of taxes that are owed.

Which of the following is not a legitimate itemized deduction?

Which of the following gross income is not taxable income?

Sally's adjusted gross income is $38,000.She does not own a home,but has charitable contributions of $1,500 and interest on her car of $2,100.This year she also had medical expenses of $2,000.She is allowed a standard deduction of $5,000 and one personal exemption of $3,200.What is Sally's taxable income? (a)$38,000 (b)$31,300 (c)$29,800 (d)$29,200

Interest income would come from earnings on

Erin has a tax credit of $100 and a marginal tax rate of 28 percent.Erin's income tax liability will be reduced by how much as a result of the credit? (a)$100 (b)$128 (c)$28 (d)$2,800

Which of the following conditions will not afford you a tax advantage?

The tax method that uses the principle of taxing those more who earn more is called ________ taxation.

Medicare taxes are 1.45% of your salary,regardless of the salary amount.

All taxpayers have a choice of whether to take the standard deduction or itemize deductions.