PF Ch. 3 Mult. Choice Semester 1
A tax due on the purchase of gasoline is called a(n): a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Inheritance tax
Excise tax
At the end of the year, employees receive a ______ form that reports annual earnings and the amounts deducted for taxes from their employer. a. 1040 b. 1099 c. W-2 d. W-4 e. Schedule A
W-2
George Franklin paid taxes of $4,400 on a taxable incoem of $42,000. What was his average tax rate? a. 10% b. 10.5% c. 15% d. 28% e. 85.5%
10.5%
Individuals can file their federal taxes using: a. Tax software b. E-file c. Electronic filing d. Telephone e. All of the above
All of the above
Annie was required to clarify or document minor questions of her tax form by mail. She participated in a(n): a. Correspondence audit b. Office audit c. Home audit d. Field audit e. Detailed audit
Correspondence audit
Fees, tips, and bonuses are forms of: a. Adjusted gross income b. Earned income c. Exclusions from income d. Tax-deferred income e. Tax- exempt income
Earned income
A tax imposed on the value of a person's property at the time of death is called a(n): a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Sales tax
Estate tax
An IRA agent visited Henry's home to verify some information on his tax return. The visit was called a(n): a. Correspondence audit b. Office audit c. Home audit d. Field audit e. Detailed audit
Field audit
When Paul completes his taxes, he can include all of the following as exemptions except: a. His 12 year old son b. Himself c. His 22 year old daughter who is a full-time student d. His wife e. His 20 year old son who is working full-time and living in an apartment
His 20 year old son who is working full-time and living in an apartment
This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels: a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Sales tax
Income tax
Amanda and Jack are working on their taxes and need to determine which form to file. They had wages, interest, and dividends. In addition they bought a house this past year and are thinking of itemizing their deductions. Which form should he use? a. 1040EZ b. 1040A c. 1040 d. 1040X e. 1040Z
1040
Peter filed his federal income taxes, but needs to make a correction to his income. Which form should he use? a. 1040EZ b. 1040A c. 1040 d. 1040X e. 1040Z
1040X
How long should you generally keep tax records?: a. Until you file your returns b. 3 years c. 5 years d. 10 years e. 15 years
3 years
David thinks that his salary and tax rates for next year will be higher than for this year. What step should he take to minimize his taxes?: a. Delay receipt of income b. Delay filing taxes c. Accelerate receipt of income d. Accelerate deductions e. None of the above will allow him to minimize his taxes
Accelerate receipt of income
Gross income after certain reductions have been made is: a. Adjusted gross income b. Earned income c. Exclusions from income d. Tax-deferred income e. Tax- exempt income
Adjusted gross income
Tax resources include all except: a. IRA publication b. Enrolled agents c. Accountants d. Attorneys e. All of the above are tax resources
All of the above are tax resources
The taxes based on the total tax due divided by taxable income is called: a. AMT b. Average tax rate c. Income tax rate d. Marginal tax rate e. Total tax rate
Average tax rate
The tax that is a major source of revenue for local governments is called a(n): a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Sales tax
Real estate tax
Payroll deductions for federal government retirement benefits (such as old-age, survivor, and disability) are called: a. Estate taxes b. Excited taxes c. Social Security taxes d. Real estate taxes e. Sales taxes
Social Security taxes
Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next? a. Add his tax-exempt income b. Subtract his itemized deductions c. Add his tax credits d. Subtract his tax-exempt income e. Add his tax exemptions
Subtract his itemized deductions
Which of the following is NOT an action that can reduce your taxes? a. Owning a home b. Taking out a consumer loan c. Paying certain work expenses d. Depositing money into a Flexible Spending Account (FSA) e. Investing in municipal bonds
Taking out a consumer loan
If Brenda wants to pay her fair share of taxes, no more and no less, she should practice: a. Tax evasion b. Tax avoidance c. Tax elimination d. Tax maximization e. Tax acceleration
Tax avoidance
Income that is taxed at a later date is: a. Adjusted gross income b. Earned income c. Exclusion from income d. Tax-deferred income e. Tax- exempt income
Tax-deferred income
Income that is never subject to tax is called: a. Adjusted gross income b. Earned income c. Foreign income d. Tax-deferred income e. Tax-exempt income
Tax-exempt income
Who is ultimately responsible for supplying accurate and complete information for the completeing of a tax return?: a. Professional tax preparer b. IRS enrolled agent c. Taxpayer d. Taxpayer's dependents e. Taxpayer's attorney
Taxpayer