Chapter 4

anita sold her home for $60,000 but purchased it originally for $20,000. she then purchased another home a month later for $70,000. the taxable amount of her capital gain is

$0

alicia has a tax credit of $100 and a marginal tax rate of 28%,. her income tax will be reduced by how much

$100

suppose your taxable income is over $66,000 but less than $137,000 nd your taxes are equal to $15,000 plus 30% of any amount over $66,000. if your income is $80,000 what is your tax payment

$19,200

which item below is an example of tax-advantaged income

$200 of municipal bond interest

alicia has an additional itemized deduction of $100 and a marginal tax rate of 28%. her income tax will be reduced by how much

$28

maria had capital losses last year of $10,000. she will be able to deduct how much form her other taxable income in that year?

$3,000

anita sold her home for $60,000 but purchased it originally for $20,000. she then purchased another home a month later for $70,000. her capital gain on the sale of the first home was

$40,000

at the end of the year your employer will provide you wth a statement indicating your total wages for the year. this form is called a

W-2

the form on which an employer lists annual taxes withheld is a

W-2 form

an inheritance tax is a type of

death tax

which of the following does NOT represent a filing status

dependant

a refund anticipation loan is associated with

electronic filing

an increase in which of the following would NOT decrease your taxable income

federal taxes withheld form wages

which of the following statements is false?

if you are listed as a dependent on your parent's return, you need NOT file an individual return yourself

Global income consists of

income from all sources

the Hope Scholarship Credit

is available for the first two years of post secondary education

the dollar value of the personal exemptions

is positively related to the number of dependents

taxpayers should claim itemized deductions only if

itemized deductions exceed the standard deduction

the standard deduction is the largest for

married couples filing jointly

if the parents claim a child as an exemption on their tax return, the child on his or her tax return

may not claim an additional exemption

the medical expense deduction may only be taken if they were

more than 7.5% of adjusted gross income

which item is a nontaxable exclusion from gross income

municipal bond interest

which of the following is NOT used to defer income

municipal bonds

matt had a $4,000 gain from the sale of his car he

must report the gain as a capital gain

FICA taxes include two components. these are

old-age disability and health insurance

the standard deduction for married couples filing jointly is

twice that of single filers

you ca receive an automatic four month extension for filing your federal tax return

under most circumstances

if your employer is withholding an excessive amount for federal taxes

you can refile a W-4 to have the withholding reduced

personal exemptions are deducted from

adjusted gross income

which is NOT a type of IRS audit

administrative audit

gross income consists of

all income subject to the federal income taxes

under the current tax law

all individuals must choose between a standard deduction or itemizing personal deductions

the federal government has

an estate tax and a gift tax but no inheritance tax

for individual with income below specified limits a contribution to a traditional IRA is taken as

and adjustment (deduction) to gross income

when taxable income exceeds certain levels, exemption and deduction allowances

are eliminated

which item below is not taken as an itemized deduction

child and dependent care expenses

which of the following could NOT be taken as an itemized deduction?

commuting expenses

which of the following would not be a good reason for itemizing deductions rather than take the standard deductions

considerable IRA contributions

taxable income = adjusted gross income minus

personal dependency exemptions and personal deductions

property taxes are

primarily imposed by local and city governments

which one of the following housing related expenditures is not an itemized deduction

property taxes, mortgage interest payments, the capital gain on sale of a home (all of the above)

which of the following is an adjustment to gross income

qualified educational expenses

with a traditional IRA and earned income below federally determined limits, the annual contributions

reduce your taxable income. the funds in the IRA and its return are not taxed until these funds are disbursed in your retirement years

which one of the following is not an itemized deduction

rental payments

individuals with above average amounts of mortgage interest, medical expenses and property taxes are most likely to

take only itemized deductions

the statute of limitations means that

the IRS has three years to impose additional tax liabilities

if you can not meet the deadline for your return

the IRS will grant you an automatic extension if you file for it. however, you will be penalized if you have not paid your taxes by the file deadline

which statement is NOT true of state and local taxes

they do not vary much from one part of the country to another

which statement is NOT true of Social Security taxes

they have a progressive rate structure similar to that of the personal income tax

the purpose of the alternative minimum tax is

to ensure that households exceeding certain income limits pay at least some tax