Question 1

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 2

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.

Question 3

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.

Question 4

Interest income would come from earnings on

Accepted Answer

A)  stocks. 
B)  savings accounts. 
C)  capital gains on investments. 
D)  sale of mutual funds.

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

In 2015,self-employed individuals paid FICA taxes at a rate of

Accepted Answer

A)  1.45 percent. 
B)  7.65 percent. 
C)  13.3 percent. 
D)  15.3 percent.

Question 7

Assume you are still single and have no children,but your two siblings live with you in your home,you should file as

Accepted Answer

A)  single. 
B)  head of household with two dependents. 
C)  single with two dependents. 
D)  single filing separately.

Question 8

If a stock was purchased for $5,000 in January 2015 and is sold in December 2015 for $3,000,a ________ of $2,000 results.

Accepted Answer

A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss

Question 9

The ________ is a fixed amount deducted from adjusted gross income to determine taxable income.

Accepted Answer

The answer of The ________ is a fixed amount deducted...

Question 10

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.

Question 11

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.

Question 12

Which of the following is not taxable for income tax purposes?

Accepted Answer

A)  Interest income 
B)  Income from a rental property 
C)  Child support 
D)  Dividend income from selling stock

Question 13

Which of the following is not subject to immediate taxation?

Accepted Answer

A)  A Christmas bonus 
B)  Tips from your waitressing job 
C)  Salary and wages 
D)  Contributions to your employer-sponsored retirement account

Question 14

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 $4,000 each.Compute their tax liability for the current year.

Accepted Answer

A)  $227 
B)  $1,170 
C)  $255 
D)  $2,780

Question 15

All of the following are types of nontaxable income except

Accepted Answer

A)  child support payments. 
B)  casualty insurance reimbursements. 
C)  rental income. 
D)  reimbursements of moving expenses by an employer.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Gross income consists of all reportable income from any source.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Exam 4: Using Tax Concepts for Planning

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

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

Gross income includes all of the following except

Interest income would come from earnings on

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

In 2015,self-employed individuals paid FICA taxes at a rate of

Assume you are still single and have no children,but your two siblings live with you in your home,you should file as

If a stock was purchased for $5,000 in January 2015 and is sold in December 2015 for $3,000,a ________ of $2,000 results.

The ________ is a fixed amount deducted from adjusted gross income to determine taxable income.

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

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

Which of the following is not taxable for income tax purposes?

Which of the following is not subject to immediate taxation?

All of the following are types of nontaxable income except

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

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

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

Gross income consists of all reportable income from any source.

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