Chapter 3 taxes personal finance
the lowest marginal tax rate is currently ?
10%
a special tax provision reduced the social security portion for the individual taxpayer in 2011 and 2012 from ?
6.2%- 4.2%
tax planning is ?
a year round activity
? would be reported as taxable income
alimony
? would be considered taxable income
alimony received
the date by which your tax liability must be paid in order to avoid late payment penalties and/or interest is ?
april 15
tax ? focuses on reducing taxes in ways that are legal and compatible with the intent of congress
avoidance
? will make social security contributions based on your wages
both you and your employer
the tax year corresponds to the ?
calendar year
a tax credit would result from ?
child care expenses
? would not be considered taxable income
child support payments
you are single with no dependents, age 30. based on this information, you ? use the 1040EZ
could
you will itemize your deductions. You ? use the 1040A
could not
the term "tax free" and "tax deferred" ? mean the same thing
do not
as a single taxpayer with no dependents, one is generally eligible to file as "head of household"
false
child support received is included in gross income
false
dwayne and gayle were divorced sep 29, have not remarried, and have no dependents. their filling status for the year will each be "married" since they were married for more than half of the year
false
if you are married, you can legally file a single tax return
false
income tax refunds are automatically sent to those who qualify for refunds no later than April 15
false
major software providers have online versions for preparing federal taxes which is ?
free to qualified tax filers
the higher your income, the ? the probability you will be audited
greater
intrest you paid on your loan could be deducted
house
The total amount that you owe for income tax in one year is your tax
liability
you would typically not include ? in your gross income
life insurance death benefit payments
there is a ? chance that one's tax return will be audited in a given year
low
the common name for federal insurance contribution act payments is ?
social security
if you earn less than 15,000 you likely pay more in ?
social security taxes
If you do not wish to itemize deductions, you can use the
standard deduction
a tax credit is subtracted from your ?
tax liability
the standard or itemized deduction, reduces the taxpayers ?
taxable income
Tax avoidance is a legal means to minimize tax liabilities.
true
dividends received from the stock you own will be taxable income
true
if you ask the IRS a tax question and are given an incorrect answer ?
you will still have to pay any additional tax owed
if you pay a professional to prepare your taxes, any errors on the return will be ? responsibility
your
the IRS definition of ? income is "all income that is subject to federal taxes"
gross
the major source of revenue for the federal government is ? taxes
income
usually a married couple will pay less income tax if they file?
jointly
your income tax filing status is determined primarily by your ? status
marital
If you are claimed as a dependent on your parents tax return, you ? claim yourself on your tax return
may not
a couple will usually incur a lower tax liability choose, "married, filing jointly" rather than "married, filing separatly"
true
a married couple would be the only couple combination that could file a joint return
true
alimony received is included in gross income for the reciever and a tax deduction for the payer
true
if you are eligible to receive a tax refund, you will have to file a tax return to get the refund
true
russ and lois got marries November 30. they were single for most of the year, however, they can legally file as married taxpayers in the year of the wedding
true
tax avoidance is legal, tax evasion is illegal
true
the congress writes and passes the internal revenue code
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 keep by minimizing the amount of taxes you pay
true
you should itemize deductions when total itemized deductions exceed the standard deduction
true
your tax filing status ? be a factor in determining the amount of standard deduction you could take
would
which of the following can be adjustments to gross income on the 1040 form?
a, b, and c health insurance premiums paid by self-employed individuals, alimony paid, and moving expenses
you will have to list and be able to prove ? deductions if audited
itemized
dividends received from stocks are known as ? income
portfolio
a capital gain is the result of ?
selling an asset for more than purchase price
tax credits directly reduce a taxpayer's ?
taxes due
Jackson is a 25 year old college student whose parents contribute to his support. His parents may claim him as a tax dependent in 2011 as long as a. they contribute more than half of his support for the year.
they contribute more than half of his support for the year
the medicare portion of the social security tax is paid on 100% of earnings
true
intrest you paid on your ? loan could be deducted
vacation home
your martial status ? have an effect on the amount of social security tax you pay
will not
my son, age 21, earned $5,000 last year. he still lived at home, and i provide over 50% of his support. I ? claim him as a dependent on my tax return if he is a full time college student
can
christy lives by herself with her dog, tex, she ? use the house of headhold filing status?
cannot
my son, age 26 and a full-time college student, earned 5,000 last year. he still lives at home, and i provide over 50% of his support. I ? claim him a dependent on my tax returns
cannot
tax ? involves failure to accurately report income or deductions, and, in extreme cases, a failure to pay taxes all together
evasion
social security taxes are deducted from all wages and salaries earned in a year
false
there is no limit on the amount of social security withheld annually
false
