Finance Quiz #3

Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?

1040X

At the end of the year, Yvonne received a form from her bank that reported income from her savings. That form is called a

1099

At the end of the year, Walter received a form that showed his payments from independent contracting. That form is called a

1099.

Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?

Married, filing a joint return

Taxpayers over 65 can only deduct expenses that are greater than 7.5% of adjusted gross income for

Medical and dental expenses.

Athena wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is NOT a proper itemized deduction?

Miscellaneous expenses less than 2% of AGI

Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction?

Miscellaneous expenses that exceed 2% of AGI

Gross (or total) income includes

Passive income.

Janet is completing her federal income taxes for the year and has identified the amounts listed here. How much can she rightfully deduct? ● AGI: $43,500 ● Medical and dental expenses: $1250 ● State income taxes: $1150 ● Mortgage interest: $7600 ● Charitable contributions: $1500

$10,250

Using the following table, calculate the taxes for an individual with taxable income of $62,000. 10​ % Up to $10,200 15​ % $10,200-$43,000 25​ % $43,000-$100,600 28​ % $100,600-$199,900 33​ % $199,900-$413,150 35​ % Over $413,150

$10,690

The maximum amount that an individual can give another in a year without being subject to estate taxes is

$14,000.

Sam and Diane are completing their federal income taxes for the year and have identified the amounts listed here. How much can they rightfully deduct? ● AGI: $82,000 ● Medical and dental expenses: $9200 ● State income taxes: $3700 ● Mortgage interest: $10,300 ● Charitable contributions: $1400

$16,400.00.

A tax credit of $230 for a person in a 28 percent tax bracket would reduce a person's taxes by:

$230

An itemized deduction of $6350 with a 38 percent tax rate would reduce a person's taxes by:

$2413.00.

Using the following table, calculate the taxes for an individual with taxable income of $23,800. 10​ % Up to $8800 15​ % $8800 − $36,000 25​ % $36,000 − $86,600 28​ % $86,600 − $178,900 33​ % $178,900 − $385,150 35​ % Over $385,150

$3130.

Michele Barbour is considering an additional charitable contribution of $1250 to a tax-deductible charity, bringing her total itemized deductions to $12,000. If Michelle is in a 28 percent tax bracket, how much will this $1250 contribution reduce her taxes?

$350

George Washburn had earnings from his salary of $46,200, interest on savings of $1005, a deductible contribution to an IRA of $1850, and dividends from mutual funds of $675. George's adjusted income (AGI) would be

$46,030.

If Jack was in a 25% tax bracket and received a $1900 tax deduction, by how much would his taxes be reduced?

$475

Penny knows that she needs to file her federal income taxes, but she is unable to do so by April 15. What form does she need to complete to obtain an automatic six-month extension?

4868

Fred has been completing his own tax returns for years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation?

6 years.

Recent tax credits include all of the following except the

AMT tax credit.

The tax designed to ensure that those who receive tax breaks also pay their fair share of taxes is called the

AMT.

Gross income less Adjustments to Income equals

Adjusted gross income.

When calculating federal income taxes, what increases "gross income"?

Alimony received

The tax based on the total tax due divided by taxable income is called the

Average tax rate.

Adjustments to income include all of the following except

Charity contributions.

Which of the following is NOT a tax credit?

Domestic tax credit

Tanya is a single low-income working parent, and Fred is a single high-income working parent. Because of her status, Tanya, but not Fred, may be eligible for the

Earned income credit.

When calculating federal income taxes, "gross income" includes all of the following except

Earned income credit.

Fees, tips, and bonuses are forms of

Earned income.

When Paul completes his taxes, he can include all of the following as exemptions except

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.

Income tax

Bob was married to Sandy, and they have a 12-year-old son. Sandy passed away last year. Bob needs to complete his federal income taxes for the year. What filing status could he use for 2 years after the death of his spouse?

Qualifying widow or widower

The tax that is a major source of revenue for local governments is called a(n)

Real estate property tax.

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?

Subtract his itemized deductions.

Income that is taxed at a later date is

Tax-deferred income.

Income that is not subject to tax is called

Tax-exempt income.

At the end of the year, Xavier received a form from his employer that reported annual earnings and the amounts deducted for taxes. That form is called a

W-2.

You may be required to make estimated tax payments if

You are an independent contractor.

A person with a total tax liability of $8850 and withholding of federal taxes of $5800 would:

owe $3050.