PF Ch. 3 Mult. Choice Semester 1

A tax due on the purchase of gasoline is called a(n): a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Inheritance tax

Excise tax

At the end of the year, employees receive a ______ form that reports annual earnings and the amounts deducted for taxes from their employer. a. 1040 b. 1099 c. W-2 d. W-4 e. Schedule A

W-2

George Franklin paid taxes of $4,400 on a taxable incoem of $42,000. What was his average tax rate? a. 10% b. 10.5% c. 15% d. 28% e. 85.5%

10.5%

Individuals can file their federal taxes using: a. Tax software b. E-file c. Electronic filing d. Telephone e. All of the above

All of the above

Annie was required to clarify or document minor questions of her tax form by mail. She participated in a(n): a. Correspondence audit b. Office audit c. Home audit d. Field audit e. Detailed audit

Correspondence audit

Fees, tips, and bonuses are forms of: a. Adjusted gross income b. Earned income c. Exclusions from income d. Tax-deferred income e. Tax- exempt income

Earned income

A tax imposed on the value of a person's property at the time of death is called a(n): a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Sales tax

Estate tax

An IRA agent visited Henry's home to verify some information on his tax return. The visit was called a(n): a. Correspondence audit b. Office audit c. Home audit d. Field audit e. Detailed audit

Field audit

When Paul completes his taxes, he can include all of the following as exemptions except: a. His 12 year old son b. Himself c. His 22 year old daughter who is a full-time student d. His wife e. His 20 year old son who is working full-time and living in an apartment

His 20 year old son who is working full-time and living in an apartment

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels: a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Sales tax

Income tax

Amanda and Jack are working on their taxes and need to determine which form to file. They had wages, interest, and dividends. In addition they bought a house this past year and are thinking of itemizing their deductions. Which form should he use? a. 1040EZ b. 1040A c. 1040 d. 1040X e. 1040Z

1040

Peter filed his federal income taxes, but needs to make a correction to his income. Which form should he use? a. 1040EZ b. 1040A c. 1040 d. 1040X e. 1040Z

1040X

How long should you generally keep tax records?: a. Until you file your returns b. 3 years c. 5 years d. 10 years e. 15 years

3 years

David thinks that his salary and tax rates for next year will be higher than for this year. What step should he take to minimize his taxes?: a. Delay receipt of income b. Delay filing taxes c. Accelerate receipt of income d. Accelerate deductions e. None of the above will allow him to minimize his taxes

Accelerate receipt of income

Gross income after certain reductions have been made is: a. Adjusted gross income b. Earned income c. Exclusions from income d. Tax-deferred income e. Tax- exempt income

Adjusted gross income

Tax resources include all except: a. IRA publication b. Enrolled agents c. Accountants d. Attorneys e. All of the above are tax resources

All of the above are tax resources

The taxes based on the total tax due divided by taxable income is called: a. AMT b. Average tax rate c. Income tax rate d. Marginal tax rate e. Total tax rate

Average tax rate

The tax that is a major source of revenue for local governments is called a(n): a. Estate tax b. Excise tax c. Income tax d. Real estate tax e. Sales tax

Real estate tax

Payroll deductions for federal government retirement benefits (such as old-age, survivor, and disability) are called: a. Estate taxes b. Excited taxes c. Social Security taxes d. Real estate taxes e. Sales taxes

Social Security taxes

Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next? a. Add his tax-exempt income b. Subtract his itemized deductions c. Add his tax credits d. Subtract his tax-exempt income e. Add his tax exemptions

Subtract his itemized deductions

Which of the following is NOT an action that can reduce your taxes? a. Owning a home b. Taking out a consumer loan c. Paying certain work expenses d. Depositing money into a Flexible Spending Account (FSA) e. Investing in municipal bonds

Taking out a consumer loan

If Brenda wants to pay her fair share of taxes, no more and no less, she should practice: a. Tax evasion b. Tax avoidance c. Tax elimination d. Tax maximization e. Tax acceleration

Tax avoidance

Income that is taxed at a later date is: a. Adjusted gross income b. Earned income c. Exclusion from income d. Tax-deferred income e. Tax- exempt income

Tax-deferred income

Income that is never subject to tax is called: a. Adjusted gross income b. Earned income c. Foreign income d. Tax-deferred income e. Tax-exempt income

Tax-exempt income

Who is ultimately responsible for supplying accurate and complete information for the completeing of a tax return?: a. Professional tax preparer b. IRS enrolled agent c. Taxpayer d. Taxpayer's dependents e. Taxpayer's attorney

Taxpayer