Chapter 4

tax-deferred retirement plans

A traditional IRA, Keogh plan and 401(k) plan are examples of:

interest income on municipal bonds

An example of a tax-exempt investment is:

real estate property taxes.

An expense that would normally be included in the itemized deductions of a taxpayer is:

Income tax

Drew Davis earns $4500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes. What type of tax is this most likely to be?

an enrolled agent

Kelly Vernon wants her tax return prepared by a government approved tax expert. Which of the following tax preparers should Kelly use?

estate

What type of tax is imposed on the value of an individual's property at the time of his or her death?

401(k) Plan

Which of the following is a retirement plan sponsored by an employer?

the standard deduction

Which of the following items is a set amount on which no taxes are paid?

exclusions

Which of the following would result in a reduction of taxable income?

a correspondence audit

Which type of audit is the least complicated for taxpayers?

excise

Which type of tax is imposed on specific goods and services at the time of purchase?

Flexible spending account

A ________________ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical and child care costs.

credit

A tax ____________ is an amount subtracted directly from the amount of taxes owed.

receive more than one half of his or her support from the taxpayer

For a dependent to qualify as an exemption, he or she must

a home equity loan

For which of the following types of credit plans is the interest tax deductible?

tax shelter

Tax-deferred retirement plans are a type of:

earnings on the account are tax free after five years.

The Roth IRA differs from the regular IRA in that:

real estate

The ______________ property tax is based on the value of land and buildings at some point in time.

investment

Money received in the form of dividends or interest is ____________ income.