Personal Finance Ch 3

A married couple filling a joint return has Ms. Cindy Cook, a CPA, complete their return. The IRS will hold only Ms. Cook responsible for any errors on the return.

False

An investment must be owned over two years in order to qualify for long-term capital gains treatment.

False

As a single taxpayer with no dependents, one is generally eligible to file head of household.

False

Federal income taxes paid can be deducted the following year.

False

Gross Income - Tax Exempt Income = Adjusted Gross Income

False

If you were married, you can legally file a single tax return.

False

One's marginal tax rate is typically lower than one's average tax rate.

False

Opening a traditional IRA would allow you to take advantage of tax-free earnings.

False

The internal revenue service is responsible for making changes to the federal income tax codes.

False

Your marital status will affect the amount of social security you must pay in a year.

False

A personal with a significant amount of investment income would have a high probability of needing to make estimated tax payments.

True

A short-term capital gain would be taxed at the same rate as your salary.

True

Itemized deductions could include certain taxes, medical expenditures, and home mortgage interest.

True

Mortgage interest and paid home property taxes are both itemized deductions items.

True

Social security taxes are paid on earned income, but not on investment income.

True

Tax avoidance is a legal means to minimize tax liabilities.

True

The federal personal income tax is a progressive tax.

True

The main objective of tax planning is to maximize the amount of money you kept by minimizing the amount of taxes you pay.

True

When a child qualifies as dependent on her parent's return, the child cannot take a personal exemption.

True