FIN 2100 Ch 4
An audit that requires a visit to your home, business or accountant's office which can be used to verify whether an individual has an office in the home is called:
A field audit.
A dollar of tax credit has:
A larger effect than a dollar of deductions.
A personal exemption refers to:
A reduction from adjusted gross income for the taxpayer(s) and each dependent listed on the tax return
A taxpayer has $10,000 in charitable contributions and will be using Schedule A with no limitations. The taxpayer is in the 28% marginal tax bracket. The charitable contribution reduced taxable income and his/her taxes by:
Taxable income is $10,000 lower; taxes reduced by $2,800.
You earn a salary of $5500 a month and your employer withholds $2500 a month in income and social security taxes on this salary. This is an example of:
Taxes on earnings.
Which of the following is not likely to be an allowable deduction (either in whole or part) for federal income taxes?
The $2.50 per day in tolls that you pay to drive to and from your office at work every day.
You are single and earn $35,000 during the year and have interest and dividend income of $4000. You have medical expenses totaling $9000 during the year, make charitable contributions of $2500, have job related expenses of $2000 and have mortgage interest of $3000. What is your taxable income?
$22,555
You are single and earn a salary of $40,000 for the year. You have earned $1000 in interest income on some corporate bonds that you own. You have earned $1500 in dividends for the year. Finally you earned a bonus this year of $5000. In addition, during the year you make an IRA contribution of $2000. What is your adjustable gross income for this year?
$45,500
Your adjusted gross income is $34,500. You have $12,000 in medical expenses for the year. What would be your itemized deduction for your medical expenses?
$8550
With respect to the taxability of corporate dividends paid to individuals and capital gains on stocks and bonds,
Both dividends from corporations and capital gains are taxable to individuals
A $1,000 tax deduction is more valuable than a $300 tax credit (assuming the taxpayer is in a 25% tax bracket).
False
You have calculated that you owe $16,075 in taxes for the year. During this same year you had $18,350 in withholding. You:
Have a refund of $2275 from the federal government.
An example of tax-exempt income is
Interest or mutual fund dividends derived from municipal bonds or municipal bond mutual funds.
You own 1000 shares of Abbott Laboratories and they paid you a dividend of $.94 per share last year. This money is part of:
Investment income.
_______________ is (are) fully deductible as an itemized deduction on Schedule A.
Mortgage interest on a primary residence
Interest income from __________ which are issued by state and local governments are not subject to federal income taxes.
Municipal bonds