Question 1

From the following information, determine Steve's gross income for tax purposes.

Accepted Answer

Steve's gross income for tax p...

Question 2

Mark is not married and has dependent parents. He pays more than half of the cost of keeping a home for himself and his parents. His tax filing status is:

Accepted Answer

A)  single taxpayer.
B)  married filing jointly.
C)  married filing separately.
D)  head of household.
E)  qualifying widow.F) A) and B)
G) B) and E)

Question 3

Payments under the provisions of the Federal Insurance Contributions Act (FICA) are also known as:

Accepted Answer

A)  income tax.
B)  Social Security tax.
C)  property tax.
D)  capital gains tax.
E)  marginal tax.F) C) and D)
G) B) and E)

Question 4

All taxpayers have an equal probability of having their tax returns audited.

Accepted Answer

A) True 
 B)False

Question 5

In 2018, the total FICA tax rate was:

Accepted Answer

A)  6.0%.
B)  6.75 %.
C)  7.25 %.
D)  13.4 %.
E)  15.3 %.F) C) and D)
G) A) and C)

Question 6

Based on the given information, what is Max's portfolio income?

Accepted Answer

A)  $13,000
B)  $6,000
C)  $8,000
D)  $16,000
E)  $18,000F) A) and E)
G) D) and E)

Question 7

A _____ would most likely have to pay estimated taxes.

Accepted Answer

A)  school teacher
B)  manager for an industrial firm
C)  self-employed plumber
D)  union worker
E)  corporate attorneyF) A) and D)
G) B) and D)

Question 8

Peter's tax computed per the tax rate schedule amounts to $2,000, and his tax credits amount to $500. His total tax liability is:

Accepted Answer

A)  $2,500.
B)  $1,500.
C)  $3,000.
D)  $2,200.
E)  $4,000.F) A) and C)
G) A) and B)

Question 9

Sue and Tim are married taxpayers in the 32% marginal tax bracket. In 2018, they sold common stock shares, which they held for more than 3 months, for a capital gain of $3,800. They also sold some technology stock for a short-term capital loss of $9,000. In addition, they sold the home they had lived in for the past 10 years and experienced a $75,000 gain on the house. How much will their net capital gains (or losses)be for 2018? How much will they pay (or save)in taxes as a result of these transactions?

Accepted Answer

The net loss is $5,200 ($9,000 - $3,800)...

Question 10

A tax credit could result from:

Accepted Answer

A)  owning a home.
B)  adopting a child.
C)  charitable contributions.
D)  investing in municipal bonds.
E)  dental expenses.F) B) and E)
G) B) and C)

Question 11

Your take-home pay is what you are left with after subtracting withholdings from your:

Accepted Answer

A)  gross earnings.
B)  net earnings.
C)  taxable income.
D)  adjusted gross income.
E)  tax-exempt income.F) B) and C)
G) D) and E)

Question 12

Which of the following statements regarding enrolled agents is true?

Accepted Answer

A)  They are tax professionals who advise only professionals in tax planning.
B)  They are taxpayers with relatively common types of income and expenditure.
C)  They are federally licensed individual tax practitioners.
D)  They are lawyers who specialize in tax planning.
E)  They are federal agents who collect taxes from taxpayers.F) A) and D)
G) C) and D)

Question 13

Russ and Lois were married on December 30. Even though they were single for most of the year, they can legally file as married filing jointly taxpayers in the year of the wedding.

Accepted Answer

A) True 
 B)False

Question 14

Your income tax withholding is dependent on:

Accepted Answer

A)  your age and educational qualification.
B)  the number of deductions claimed by your spouse.
C)  your income level and the number of withholding allowances you have claimed.
D)  the number of standard deductions you have claimed.
E)  the number of withholding allowances allowed by your employer.F) A) and E)
G) B) and E)

Question 15

Which of the following private tax preparers are required to pass an exam administered by the Internal Revenue Service (IRS) ?

Accepted Answer

A)  National and local tax services
B)  Certified public accountants (CPAs) 
C)  Enrolled agents (EAs) 
D)  Tax attorneys
E)  Corporate managersF) D) and E)
G) B) and C)

Question 16

_____ would be considered a part of your taxable income.

Accepted Answer

A)  Your (individual retirement account) IRA contributions
B)  A gift from your aunt
C)  Your child-support payments
D)  A gain from the sale of your assets
E)  Your tuition scholarshipF) A) and B)
G) All of the above

Question 17

Which of the following statements regarding tax credits is true?

Accepted Answer

A)  They are deductions that depend on the taxpayer's filing status, age, and vision and that can be claimed by a taxpayer whose total itemized deductions are small.
B)  They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income.
C)  They represent the income remaining after subtracting all allowable adjustments to income from the gross income.
D)  They are personal expenditures that can be deducted from adjusted gross income when determining taxable income.
E)  They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due.F) B) and C)
G) None of the above

Question 18

Income shifting refers to the process of transferring income from the taxpayer to the IRS.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is subject to federal income tax?

Accepted Answer

A)  The tax credit earnings on a Roth IRA
B)  Municipal bond interest
C)  Child-support payments
D)  Tips received
E)  Personal exemptionsF) A) and B)
G) A) and E)

Question 20

A capital gain is the result of:

Accepted Answer

A)  selling an asset for less than its purchase price.
B)  holding an asset that has depreciated.
C)  selling an asset at its purchase price.
D)  selling an asset for more than its purchase price.
E)  buying a new asset at a rate lower than the market rate of the asset.F) All of the above
G) None of the above

Exam 3: Preparing Your Taxes

Peter's tax computed per the tax rate schedule amounts to $2,000, and his tax credits amount to $500. His total tax liability is:

Correct Answer
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Correct Answer
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The net loss is $5,200 ($9,000 - $3,800)...
View Answer

In 2018, the total FICA tax rate was:

Correct Answer
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Your income tax withholding is dependent on:

Correct Answer
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Which of the following is subject to federal income tax?

Correct Answer
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Income shifting refers to the process of transferring income from the taxpayer to the IRS.

Correct Answer
verified

Which of the following statements regarding tax credits is true?

Correct Answer
verified

Payments under the provisions of the Federal Insurance Contributions Act (FICA) are also known as:

Correct Answer
verified

A tax credit could result from:

Correct Answer
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Which of the following private tax preparers are required to pass an exam administered by the Internal Revenue Service (IRS) ?

Correct Answer
verified

_____ would be considered a part of your taxable income.

Correct Answer
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Mark is not married and has dependent parents. He pays more than half of the cost of keeping a home for himself and his parents. His tax filing status is:

Correct Answer
verified

Which of the following statements regarding enrolled agents is true?

Correct Answer
verified

Your take-home pay is what you are left with after subtracting withholdings from your:

Correct Answer
verified

From the following information, determine Steve's gross income for tax purposes.

Correct Answer
verified
Steve's gross income for tax p...
View Answer

All taxpayers have an equal probability of having their tax returns audited.

Correct Answer
verified

A capital gain is the result of:

Correct Answer
verified

Based on the given information, what is Max's portfolio income?

Correct Answer
verified

A _____ would most likely have to pay estimated taxes.

Correct Answer
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Russ and Lois were married on December 30. Even though they were single for most of the year, they can legally file as married filing jointly taxpayers in the year of the wedding.

Correct Answer
verified

Exam 3: Preparing Your Taxes

Peter's tax computed per the tax rate schedule amounts to $2,000, and his tax credits amount to $500. His total tax liability is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe net loss is $5,200 ($9,000 - $3,800)...View AnswerShow Answer

In 2018, the total FICA tax rate was:

Correct AnswerverifiedShow Answer

Your income tax withholding is dependent on:

Correct AnswerverifiedShow Answer

Which of the following is subject to federal income tax?

Correct AnswerverifiedShow Answer

Income shifting refers to the process of transferring income from the taxpayer to the IRS.

Correct AnswerverifiedShow Answer

Which of the following statements regarding tax credits is true?

Correct AnswerverifiedShow Answer

Payments under the provisions of the Federal Insurance Contributions Act (FICA) are also known as:

Correct AnswerverifiedShow Answer

A tax credit could result from:

Correct AnswerverifiedShow Answer

Which of the following private tax preparers are required to pass an exam administered by the Internal Revenue Service (IRS) ?

Correct AnswerverifiedShow Answer

_____ would be considered a part of your taxable income.

Correct AnswerverifiedShow Answer

Mark is not married and has dependent parents. He pays more than half of the cost of keeping a home for himself and his parents. His tax filing status is:

Correct AnswerverifiedShow Answer

Which of the following statements regarding enrolled agents is true?

Correct AnswerverifiedShow Answer

Your take-home pay is what you are left with after subtracting withholdings from your:

Correct AnswerverifiedShow Answer

From the following information, determine Steve's gross income for tax purposes.

Correct AnswerverifiedSteve's gross income for tax p...View AnswerShow Answer

All taxpayers have an equal probability of having their tax returns audited.

Correct AnswerverifiedShow Answer

A capital gain is the result of:

Correct AnswerverifiedShow Answer

Based on the given information, what is Max's portfolio income?

Correct AnswerverifiedShow Answer

A _____ would most likely have to pay estimated taxes.

Correct AnswerverifiedShow Answer

Russ and Lois were married on December 30. Even though they were single for most of the year, they can legally file as married filing jointly taxpayers in the year of the wedding.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The net loss is $5,200 ($9,000 - $3,800)...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Steve's gross income for tax p...
View Answer

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