chapter 3 - taxes
george washington had earning from his salary of $34,000, interest on savings of $800, a contribution to an individual retirement account of $1,500, and dividends from mutual funds of $600. george's adjusted gross income (agi) would be
$33,900
a tax credit of $50 for a person in a 28% tax bracket would reduce a person's taxes by
$50
michele barbour is considering an additional charitable contribution of $2,000 to a tax-deductible charity, bringing her total itemized deductions to $16,000. if michelle is in a 28 percent tax bracket, how much will this $2,000 contribution reduce her taxes?
$560
a taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ___ percent
12.3
which type of audit is the least complicated for taxpayers
a correspondence audit
________ would qualify a person for an exemption when computing taxable income
a dependent
which of the following is least likely to have to file a federal income tax return: - a US citizen residing in Puerto Rico - a US citizen living/working in foreign country - a person earning less than $8k - a person over 65 - a college student
a person earning less than $8k
kelly vernon wants her tax return prepared by a government approved tax expert. which tax preparer should kelly use?
an enrolled agent
a deduction from adjusted gross income for yourself, your spouse, and qualified dependents is
an exemption
an example of itemized deduction is
certain job-related travel expenses
money received by an individual for personal effort is __________ income
earned
the roth ira differs from the regular ira in that
earnings on the account are tax free after five years
t/f: a general sales tax is also referred to as an excise tax
false
t/f: interest paid on credit cards and charge accounts may be deducted for taxes
false
t/f: tax avoidance refers to illegal actions to reduce one's taxes
false
the main purpose of taxes is to
generate revenue for funding government programs
taxable income is used to compute a person's
income tax
money received in the form of dividends or interest is _________ income
investment
the "head of household" filing status is for people who are
not living with a spouse and have dependent children
a person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would
owe 375
earnings from a limited partnership would be an example of ____________ income
passive
tax-deferred retirement plans are a type of
tax shelter
an ira, keogh plan, and 401(k) plan are examples of
tax-deferred retirement plans
_________ is a set amount on which no taxes are paid
the standard deduction
t/f: a person's filing status is affected by marital status and dependents
true
t/f: a tax credit is an amount subtracted directly from the amount of taxes owed
true
t/f: an estate tax is imposed on the value of an individual's property at the time of his or her death
true
t/f: an office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return
true
t/f: capital gains refer to profits from the sale of investments
true
t/f: real-estate property taxes are a major source of revenue for local governments
true
parents can reduce their taxes by
using a child-care tax credit
interest earnings of $1,600 from a taxable investment for a person in a 28% tax bracket would result in after-tax earnings of
$1,152
a person had $4,000 in medical expenses and an adjusted gross income of $32,000. if taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5% of agi, what would be the amount of the deduction?
$1,600
an itemized deduction of $500 with a 36% tax rate would reduce a person's taxes by
$180