UNL CYAF 222 Chapter 4 Quiz
A tax credit of up to ____ is available for qualifying costs of an adoption.
$10,000 $0 CORRECT: $13,190
Judy Hays wants to give $3,200 to the building fund at her local church. Assuming Judy can itemize her deductions, how much will this contribution save her on her federal income taxes if she is in the 28 percent marginal tax bracket?
$2,624 $0 $3,200 CORRECT: $896
Adjustments to gross income are permitted only if you itemize deductions
True CORRECT: False
Contributions to a Roth IRA and a Coverdell education savings account are both tax-deductible and earnings accumulate tax-free.
True CORRECT: False
Having your employer withhold more in estimated taxes than the likely tax liability ultimately due the government is a recommended technique for saving money.
True CORRECT: False
Life insurance benefits received are taxable income.
True CORRECT: False
Once you determine your gross income you may take several subtractions including adjustments, deductions, exemptions and credits to arrive at your actual taxable income.
True CORRECT: False
Tax-exempt income is most valuable to low-income taxpayers.
True CORRECT: False
The lifetime learning credit may be claimed for tuition and related expenses only for the first two years of postsecondary school.
True CORRECT: False
The rule for tax-related records is, "When in doubt, throw it out."
True CORRECT: False
To claim an earned income credit, one must have a child.
True CORRECT: False
Which of the following job-related apparel is most likely to qualify as a deductible expense?
Woman's dress for a retail buyer Jogging suit for a PE teacher Men's business suit for a bank executive CORRECT: Safety goggles for a welder
Ben and Susan Shew, filing jointly, would pay $7,054 in taxes on $53,100 of taxable income. If Ben won $6,000 in the lottery, they would pay $7,954, in taxes. What is the couple's marginal tax rate?
10 percent 28 percent 25 percent CORRECT: 15 percent
Which tax form do you use to file an amended tax return for previous year?
CORRECT: 1040X 1099 1040AM 1040ES
All gambling winnings are subject to federal income taxation.
CORRECT: False True
Because of their tax-exempt status, municipal bonds offer higher nominal returns than taxable alternatives.
CORRECT: False True
Gross income is defined as all income received in the form of money.
CORRECT: False True
The lifetime learning credit may be claimed for tuition and related expenses only for the first two years of postsecondary school.
CORRECT: False True
A flexible spending account allows an employee to set up a pre-tax account into which a part of their pay is deposited with their employer to be used to pay for child care and medical expenses.
CORRECT: True False
A short-term capital gain (or loss) occurs when the asset is held for one year or less.
CORRECT: True False
Each year the tax brackets are adjusted to reduce the effects of inflation.
CORRECT: True False
Flexible spending accounts are subject to a use-it-or-lose-it rule.
CORRECT: True False
If a taxpayer expects to be in a lower tax bracket the next year, he or she would benefit by defering income to the later year.
CORRECT: True False
Income taxes must be paid when distributions are taken from most qualified retirement plans.
CORRECT: True False
Individuals who are age 65 and older or are permanently and totally disabled may claim a nonrefundable federal tax credit.
CORRECT: True False
Personal income taxes are paid only on your taxable income.
CORRECT: True False
Taxes are defined as compulsory charges imposed by a government on its citizens and their property.
CORRECT: True False
The key to reducing one's tax liability is to reduce taxable income rather than gross income.
CORRECT: True False
To qualify for the earned income credit, taxpayers must have earned income.
CORRECT: True False
A taxpayer with a taxable income greater than $100,000 must use the tax-rate schedules rather than the tax tables to find his or her tax liability.
False CORRECT: True
An employed taxpayer's effective marginal tax rate on income is higher than his or her federal marginal tax rate.
False CORRECT: True
Charitable contributions of goods and property to a qualifying organization should be valued at fair market value when used as an itemized deduction.
False CORRECT: True
Deferring income can achieve the same result as accelerating deductions.
False CORRECT: True
Form 1040-X is used to obtain a refund when overpaid insurance because of a tax filing mistake from earlier years.
False CORRECT: True
Funds in a flexible spending account (FSA) can be accessed via an FSA debit card.
False CORRECT: True
Income taxes must be paid when distributions are taken from most qualified retirement plans.
False CORRECT: True
Personal income taxes are paid only on your taxable income.
False CORRECT: True
State sales tax is an example of a regressive tax.
False CORRECT: True
The Internal Revenue Service is the agency that collects federal income taxes.
False CORRECT: True
The key to reducing one's tax liability is to reduce taxable income rather than gross income.
False CORRECT: True
There are some cases when you should file a federal income tax return even if you are not legally required to do so.
False CORRECT: True
Union or professional dues do not qualify as a miscellaneous itemized deduction.
False CORRECT: True
The IRS requires that you have receipts for deducted cash contributions of $250 or more
False Correct: True
Qualified tuition programs include
college savings plans. CORRECT: (all of these) 529 plans. prepaid tuition plans
Tax which applies to income of a minor child earned off the assets is known as the
consumption tax. CORRECT: kiddie tax. value-added tax. regressive tax.
Adjustments to gross income
help one qualify for other deductions. can be taken even if one takes the standard deduction. are subtracted from gross income. CORRECT: all of these.
The penalty for tax evasion can include
jail sentences. CORRECT: all of these. penalties. interest charges.
Interest penalties for early withdrawal of savings from certificates of deposit are
subtractable as a credit. not subtractable. subtractable as an itemized deduction. CORRECT: subtractable as an adjustment to gross income
