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The maximum amount that an individual can give another in a year without being subject to estate taxes is: rev: 09_16_2021_QC_CS-278220 Multiple Choice Unlimited, since all gifts are taxable. $10,000. $14,000. $15,000. Correct Zero, since no gifts are taxable.

15k

The maximum that an individual can contribute to a Roth IRA for the 2020 year is: Multiple Choice $1,000. $3,000. $6,000. Correct $10,000.

6000

Annie was required to clarify or document minor questions about her tax form by a mail inquiry. She participated in a(n): Multiple Choice Correspondence audit. Correct Office audit. Home audit. Field audit. Detailed audit.

Correspondence audit.

Julia Sims has $30,000 of adjusted gross income and $5,000 of medical expenses. She expects to itemize her tax deductions this year. The most recent tax year has a medical expenses floor of 10 percent. How much of a tax deduction for medical expenses will Julia be able to take?

Deductible medical expenses = Total medical expenses - (10% of adjusted gross income)= $5,000 − (0.10 × $30,000)= $2,000 If the deductible medical expenses are equal to or less than 10 percent of adjusted gross income, then there is no deduction for medical expenses.

Individuals can file their federal taxes using all of the following except: Multiple Choice Tax preparation software to file online. Tax preparation software to print and mail. Electronic filing using Free File Alliance. Delivery in person. Correct All of these can be used.

Deliver in person

A tax imposed on the value of a person's property at the time of death is called a(n): Multiple Choice Estate tax. Correct Excise tax. Income tax. Real estate property tax. Sales tax.

Estate Tax

William is updating his estate planning and wants to draft a legal document that leaves all of his assets to his wife except a certain amount which goes into a trust. He is writing a(n): Multiple Choice Exemption trust will. Guardian will. Simple will. Stated amount will. Traditional marital share will.

Exemption trust will.

A testamentary trust takes effect while you're alive.

FALSE

A traditional marital share will leaves everything to your spouse. Group starts

FALSE The definition is for the simple will.

Contributions to a Keogh or 401(k) are tax-exempt.

FALSE These are tax-deferred contributions.

If you are single, you should not have beneficiaries.

FALSE A beneficiary is a person you have named to receive a portion of your estate after your death. If you are married, your beneficiaries might be your spouse and children. If you are single, you still need to designate beneficiaries.

If you die intestate, your property will be distributed according to your wishes.

FALSE If you have a will, your beneficiaries will receive your estate according to your wishes. If you die intestate, the state will control the distribution of your estate without regard for any wishes you may have had.

Changes to a will should be written in ink on the will and initialed. i

FALSE Additions, deletions, or erasures on a will that has been signed and witnessed may invalidate the will. Instead a codicil should be used to explain, add, or delete provisions in an existing will.

One of the best tax shelters is owning a car. Group starts

FALSE One of the best tax shelters is owning a home. Interest on automobile loans is not tax-deductible but the interest on a mortgage is tax-deductible.

If you are married, all of your assets will automatically pass to your spouse.

FALSE This is true of some assets, such as your house. The only way to ensure that all of your property will end up where you want it is to write a will.

An example of an excise tax is Social Security.

False Social Security is an example of a tax on earnings.

Amounts given for tuition payments or medical expenses are not subject to gift taxes.

TRUE

Barry and Mary have accumulated over $5.1 million during their 50 years of marriage. They have five children and three grandchildren. How much money can Barry and Mary gift to their grandchildren in 2020 without any gift tax liability? (Enter your answer in dollars not in millions of dollars.)

In 2020, you can gift up to $15,000 to any one person without incurring any gift tax. Thus, the maximum this married couple can gift to their grandchildren without incurring any gift tax is: Maximum tax-free gifts to grandchildren = $15,000 × Number of grandchildren × Number of spouses giving gifts= $15,000 × 3 × 2= $90,000

The amount levied on the value of property bequeathed by a deceased person is: Multiple Choice Inheritance tax. Correct Excise tax. Social Security tax. Real estate property tax. Sales tax.

Inheritance tax.

If 300,000 people each receive an average refund of $2,500, based on an annual interest rate of 3 percent, what would be the lost annual income from savings on those refunds?

Lost annual income = Number of refunds × Average refund amount × Interest rate= 300,000 × $2,500 × 0.03= $22,500,000

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them? Multiple Choice Single Married, filing a joint return Correct Head of household Qualifying widow or widower Married, filing individually

Married, filing a joint return

A worker's primary goal should be to: Multiple Choice Pay his or her taxes using estimates for income and deductions. Pay no income taxes. Pay the average tax rate for people working in his or her industry. Pay his or her fair share of taxes while taking advantage of appropriate tax benefits. Correct Pay no taxes of any type.

Pay his or her fair share of taxes while taking advantage of appropriate tax benefits.

The tax that is a major source of revenue for local governments is called a(n): Multiple Choice Estate tax. Gift tax. Income tax. Real estate property tax. Correct Sales tax.

Real estate property tax.

Taxes on earnings that fund old age, survivor, and disability insurance benefits are called: Multiple Choice Estate taxes. Excise taxes. Social Security taxes. Correct Real estate property taxes. Sales taxes.

Social Security taxes.

Darlene is updating her estate planning and wants to set up a legal document that leaves $5.34 million to her husband. She is writing a(n): Multiple Choice Exemption trust will. Guardian will. Simple will. Stated amount will. Traditional marital share will.

Stated amount will.

A will prepared on a pre-printed form from a stationery store is called a(n): Multiple Choice Formal will. "I love you" will. Holographic will. Ordinary will. Statutory will.

Statutory will.

"Tax Freedom Day" represents how long the average person works to pay her or his taxes each year.

TRUE

Sean's estate planning should: Multiple Choice Consist of acquiring assets using debt. Designate distribution of assets first to his cousin, then distribute whatever is left to his wife. Ignore his beneficiaries. Consist primarily of a will. Take the needs of his wife and children into account.

Take the needs of his wife and children into account.

If Brenda wants to pay her fair share of taxes, no more and no less, she should practice: Multiple Choice Tax evasion. Tax avoidance. Correct Tax elimination. Tax maximization. Tax acceleration.

Tax avoidance

If $4,323 were withheld during the year and taxes owed were $4,122, would the person owe an additional amount or receive a refund? What is the amount? (Enter the amount as a positive value.)

Tax due (refund) = Total tax − Tax withheld= $4,122 − $4,323= −$201

Based on the following data, would Beth and Roger Simmons receive a refund or owe additional taxes? What is the amount? (Enter the amount as a positive value.) Adjusted gross income$ 42,140Standard deduction$ 24,800Credit for child and dependent care expenses$ 400Federal income tax withheld$ 2,017 Tax rate on taxable income10 percent

Taxable income would be $17,340 ($42,140 − $24,800) times the tax rate of 10 percent equals $1,734 less a tax credit of $400 gives a tax liability of $1,334.When compared to federal tax withheld ($2,017), the result is a refund of $683 ($2,017 − $1,334). refund 683

According to Tax Service Warnings, who is responsible for supplying accurate and complete information for completing a tax return? Multiple Choice Professional tax preparer IRS enrolled agent Incorrect Taxpayer Correct Taxpayer's dependents Taxpayer's attorney

Taxpayer

This is the best option if you or your beneficiaries are inexperienced in financial matters and if your estate taxes will be high.

Testamentary TRUST

Individuals are allowed to give money or items valued at $14,000 or less in a year to a person without being subject to estate taxes.

True

Allison has returned to school after five years out of the work force. She is taking one course at the local university for a cost of $1,500. To minimize her taxes, should she take a tuition and fees deduction or an education credit? (Assume a 15 percent tax rate.) (Assume the education credit will equal the entire cost of the course.) multiple choice 2Tuition and fees deductionEducation credit Correct

Tuition and fees deduction = $1,500 × 0.15= $225Education credit = $1,500 Thus, the education credit is the best option.

Tax assistance sources include all of the following except: Multiple Choice IRS publications. IRS phone hotline. The Ernst & Young Tax Guide. The Internet. All of these are tax assistance sources.

all

When you die, this tax will be based on the fair market value of your investments, property, and bank accounts less an exemption (of $11.58 million in 2020).

estate tax

An estate consists of: Multiple Choice Home, vehicle, and retirement accounts only. Furniture, home, and collections only. Everything you own. Correct Everything you own except your home if you hold a mortgage on it. Incorrect None of these are correct.

everything you own

Trusts and estates must pay quarterly estimated taxes based on taxable income for: Multiple Choice Estate tax. Gift tax. Inheritance tax. Federal income tax purposes. Will tax.

federal income taxes

A(n) ______ is the creator of a trust. Multiple Choice beneficiary executor grantor guardian trustee

grantor

A(n) ____ cannot be changed or ended. Multiple Choice irrevocable trust

irrevocable trust

This is also known as an inter vivos trust.

living trust

A(n) ____ allows you to end the trust or change its terms during your lifetime. Multiple Choice irrevocable trust living will power of attorney revocable trust will

revocable trust

All of the following can reduce your taxes today except investing in: Multiple Choice Municipal bonds. A tax-deferred annuity. A Section 529 savings plan. A 401(k) plan. Incorrect A Roth IRA

roth ira

An inter vivos trust takes effect while you're alive. living trust

true

Probate is expensive, lengthy, and public.

true

A(n) ______ administers a trust. Multiple Choice beneficiary executor grantor guardian trustee

trustee