Question 1

A state may impose a personal property tax.

Accepted Answer

A) True 
 B)False

Question 2

An IRA,Keogh plan,and 401 plan are examples of:

Accepted Answer

A)  tax-exempt retirement plans.
B)  tax-deferred retirement plans.
C)  capital gains.
D)  self-employment insurance programs.
E)  job-related expenses that are tax deductible.F) A) and E)
G) A) and C)

Question 3

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

Accepted Answer

A)  General sales tax
B)  Excise tax
C)  Personal property tax
D)  Income tax
E)  Estate taxF) All of the above
G) A) and D)

Question 4

Factors that affect a person's filing status include marital status and:

Accepted Answer

A)  employment status.
B)  age.
C)  occupation.
D)  dependents.
E)  place of residence.F) None of the above
G) A) and B)

Question 5

Union dues,fees for tax return preparation,and other miscellaneous expenses are:

Accepted Answer

A)  not deductible.
B)  fully deductible.
C)  deductible for self-employed individuals only.
D)  deductible for people in certain income categories.
E)  deductible to the extent they exceed two percent of adjusted gross income.F) C) and D)
G) D) and E)

Question 6

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

Accepted Answer

A)  $500.
B)  $36.
C)  $464.
D)  $280.
E)  $180.F) C) and D)
G) B) and E)

Question 7

Which one of the following items is a set amount of income on which no taxes are paid?

Accepted Answer

A)  Itemized deductions
B)  Standard deduction
C)  Deferred income
D)  Withholding
E)  Capital gainsF) B) and E)
G) A) and D)

Question 8

The "head of household" filing status is for people who are:

Accepted Answer

A)  recently divorced.
B)  recently widowed.
C)  unmarried and have dependent children.
D)  married but only one spouse has income.
E)  married and each spouse makes about the same income.F) A) and E)
G) B) and C)

Question 9

The principal purpose of taxes is to control economic conditions.

Accepted Answer

A) True 
 B)False

Question 10

A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent.

Accepted Answer

A)  8.6
B)  10.3
C)  12.3
D)  14.2
E)  16.7F) B) and C)
G) D) and E)

Question 11

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Accepted Answer

A)  Inheritance
B)  Excise
C)  Gift
D)  Personal property
E)  EstateF) All of the above
G) B) and E)

Question 12

Tax avoidance refers to illegal actions to reduce one's taxes.

Accepted Answer

A) True 
 B)False

Question 13

Personal property taxes may tax the value of:

Accepted Answer

A)  automobiles.
B)  boats.
C)  farm equipment.
D)  All of these
E)  None of theseF) B) and E)
G) C) and E)

Question 14

Estimated quarterly tax payments must be made by people who:

Accepted Answer

A)  are employed in a foreign country.
B)  receive regular payroll checks.
C)  work for the government.
D)  do not have taxes withheld from income.
E)  itemize deductions.F) A) and C)
G) B) and C)

Question 15

Which one of the following would be deducted from gross income to obtain adjusted gross income?

Accepted Answer

A)  Alimony payments
B)  Mortgage interest
C)  Medical expenses
D)  Moving expenses
E)  Charitable contributionsF) C) and E)
G) A) and B)

Question 16

Which of the following is not true about exemptions?

Accepted Answer

A)  An exemption includes a deduction for qualified dependents.
B)  Exemptions increase your taxable income.
C)  An exemption includes a deduction for yourself.
D)  An exemption includes a deduction for your spouse
E)  Each exemption is worth $4,050 in 2016.F) A) and D)
G) A) and C)

Question 17

A short-term capital gain is profit earned on an investment that is:

Accepted Answer

A)  made involving small companies.
B)  not taxed as ordinary income.
C)  held less than 12 months.
D)  in foreign companies.
E)  made in real estate.F) B) and C)
G) All of the above

Question 18

The Form 1040 is most helpful to a person who:

Accepted Answer

A)  is single with no other exemptions.
B)  makes less than $50,000 with no interest or dividends.
C)  itemizes deductions.
D)  has exempt income.
E)  has a simple tax situation.F) C) and D)
G) A) and B)

Question 19

Tax-deferred retirement plans are a type of:

Accepted Answer

A)  exemption.
B)  itemized deduction.
C)  passive income.
D)  tax shelter.
E)  tax credit.F) C) and D)
G) A) and C)

Question 20

Effective personal tax strategies include:

Accepted Answer

A)  take advantage of tax credits for which you qualify.
B)  consider tax-exempt investments, such as municipal bonds.
C)  search out all possible itemized deductions.
D)  maximize contributions to tax-deferred retirement programs.
E)  All of theseF) C) and D)
G) D) and E)

Exam 4: Planning Your Tax Strategy

A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent.

Correct AnswerverifiedShow Answer

A state may impose a personal property tax.

Correct AnswerverifiedShow Answer

Which one of the following items is a set amount of income on which no taxes are paid?

Correct AnswerverifiedShow Answer

Factors that affect a person's filing status include marital status and:

Correct AnswerverifiedShow Answer

Which one of the following would be deducted from gross income to obtain adjusted gross income?

Correct AnswerverifiedShow Answer

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

Correct AnswerverifiedShow Answer

The Form 1040 is most helpful to a person who:

Correct AnswerverifiedShow Answer

An itemized deduction of $500 with a 36 percent tax rate would reduce a person's taxes by:

Correct AnswerverifiedShow Answer

Tax-deferred retirement plans are a type of:

Correct AnswerverifiedShow Answer

The principal purpose of taxes is to control economic conditions.

Correct AnswerverifiedShow Answer

Union dues,fees for tax return preparation,and other miscellaneous expenses are:

Correct AnswerverifiedShow Answer

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Correct AnswerverifiedShow Answer

The "head of household" filing status is for people who are:

Correct AnswerverifiedShow Answer

Tax avoidance refers to illegal actions to reduce one's taxes.

Correct AnswerverifiedShow Answer

Personal property taxes may tax the value of:

Correct AnswerverifiedShow Answer

Which of the following is not true about exemptions?

Correct AnswerverifiedShow Answer

An IRA,Keogh plan,and 401 plan are examples of:

Correct AnswerverifiedShow Answer

Estimated quarterly tax payments must be made by people who:

Correct AnswerverifiedShow Answer

Effective personal tax strategies include:

Correct AnswerverifiedShow Answer

A short-term capital gain is profit earned on an investment that is:

Correct AnswerverifiedShow Answer

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