CAFF Ch. 4
Brian makes $27,000 per year. How much can Brian expect to contribute to FICA taxes? $2,065 $1,674 $391 $2,664
$2,065
Alys makes $450 per week. How much will be withheld from her weekly check total for Social Security & Medicare taxes- total FICA taxes? (Hint: The Social Security tax rate is 6.20% and the Medicare tax rate is 1.45%.) $27.90 $6.53 $34.43 $344.25
$34.43
Taxable income is calculated as: -gross adjusted income less the total exemptions. -is equal to the adjusted gross income less the Standard Deduction -is equal to the adjusted gross income less the Itemized Deduction. -All of the above are correct
-All of the above are correct
The difference between a tax deduction and a tax credit is: -a tax credit reduces the amount of taxable income, while a tax deduction directly increases the amount of tax owed -a tax deduction reduces the amount of taxable income, while a tax credit directly reduces the amount of tax owed -a tax credit reduces the amount of taxable income, while a tax deduction directly reduces the amount of tax owed -a tax deduction increases the amount of taxable income, while a tax credit directly reduces the amount of tax owed
-a tax deduction reduces the amount of taxable income, while a tax credit directly reduces the amount of tax owed
Common types of tax credits include: -health and casualty insurance reimbursements and state taxes. -child credits and health and casualty insurance reimbursements -adoption credits and child credits -adoption credits and health and casualty insurance reimbursements
-adoption credits and child credits
To file 2019 Taxes, Nick is a single father and has three children under 18 years old. He has an adjusted gross income of $67,400. If the standard deduction is $18,350, and he gets a tax credit for each child, how much of a credit will Nick be able to reduce his federal tax bill by? $1,400 $2,000 $6,000 $3,000
$6,000
Tracy is single, with all W-2 income, and had an adjusted gross income of $37,000. Tracy also has the following items: medical expenses $2,000 State income tax $1,850 Interest expense (first mortgage) $3,040 Interest expense (second mortgage) $1,200 Real estate tax $700 Interest expense—car loan $550 Interest expense—credit card $125 Gifts to charity $300 How much may Tracy claim as itemized deductions? $7,640 $10,090 $9,790 $7,090
$7,090
A standard deduction is: -variable amount deducted from unadjusted net income to determine taxable income. -fixed amount deducted from unadjusted net income to determine taxable income. -variable amount deducted from adjusted gross income to determine taxable income. -fixed amount deducted from adjusted gross income to determine taxable income.
-fixed amount deducted from adjusted gross income to determine taxable income.
Adjusted gross income is determined by calculating: -gross income plus special adjustments such as contributions to traditional individual retirement accounts -gross income minus taxes -taxable income minus special adjustments such as contributions to traditional individual retirement accounts -gross income minus special adjustments such as contributions to traditional individual retirement accounts.
-gross income minus special adjustments such as contributions to traditional individual retirement accounts.
