BUSI 223 Quiz 3 Tax Strategies solutions complete answers

BUSI 223 Quiz 3 Tax Strategies solutions complete answers

 

John Garcia had earnings from his salary of $38,000, interest on savings of $1,550, a contribution to a traditional individual retirement account of $1,170, and dividends from mutual funds of $350. John's adjusted gross income would be:

 

Harlan Manning is 55 years old, and has adjusted gross income of $40,000. He has medical expenses for the year ending 2020 of $7,000. How much of these expenses can he include as an itemized deduction? 

 

A tax credit of $110 for a person in a 35 percent tax bracket would reduce a person's taxes owed by:

Note: Round your answer to the nearest whole number.

 

The standard deduction is a set amount on which no taxes are paid. For 2021, single people receive a standard deduction of:

 

The tax on $2,000 of profit on a capital asset is deferred. A person in a 24 percent tax bracket will have to pay what amount of taxes when the asset is sold? 

 

A person who owes total federal income taxes of $4,400 but had total withholdings of $3,980 would:

 

A person has $6,100 in medical expenses and an adjusted gross income of $30,000. If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.50 percent of adjusted gross income, what would be the amount of the deduction in this situation?

Note: Round your answer to the nearest whole number.

 

When a taxpayer's income increases by $805 and the taxes owed increases from $7,837 to $8,187, the marginal tax rate is ______blank percent.

Note: Round your answer to the nearest whole number.

 

Aida Hassen is single and earns $40,000 in taxable income. She uses the following tax rate schedule to calculate the taxes she owes. 

Up to $9,950
10%
$9,951 − $40,525
12%
$40,526 − $86,375
22%
$86,376 − $164,925
24%
What is Aida's marginal tax rate?

 

Theo Roth has adjusted gross income of $82,000. During the year, Theo decided he needed a larger home. He purchased a home on a golf course in the same town as his first home. He incurred $6,000 in moving expenses. How much of this can he include as an itemized deduction?

 

Vivian Reid just died. At the time of her death the total value of her assets was $150,000. The federal government collected $7,500 in taxes based on this value. What type of tax is this most likely to be?

 

The ______________blank property tax is based on the value of land and buildings.

 

Which of the following is a major source of revenue for local governments?

 

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

 

Itemized deductions are recorded on:

 

A taxpayer whose spouse recently died and who has a dependent is most likely to use the ____________ filing status.

 

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

 

Which one of these terms is defined as the use of legitimate methods to reduce one’s taxes?

 

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

 

Which one of the following is most likely to qualify as an itemized deduction? 

 

Most people pay the following taxes:

 

The principal purpose of taxes is to:

 

The interest is deductible on your tax return for which of the following?

 

A tax credit of $100 for a person in a 24 percent tax bracket would reduce a person's taxes owed by:

 

A taxpayer with a taxable income of $45,328 and a total tax bill of $5,911 would have an average tax rate of ____ percent. 

 

Randal Snyder is 55 years old, and has adjusted gross income of $40,000. He has medical expenses for the year ending 2018 of $7,000. How much of these expenses can he include as an itemized deduction? 

 

George Washburn had earnings from his salary of $41,000, interest on savings of $1,600, a contribution to a traditional individual retirement account of $1,110, and dividends from mutual funds of $210. George's adjusted gross income would be:

 

When a taxpayer's income increases by $980 and the taxes owed increases from $7,687 to $8,017, the marginal tax rate is ______ percent. (Round your answer to the nearest whole number.)

 

Mike Hansen has adjusted gross income of $82,000. During the year, Mike decided he needed a larger home. He purchased a home on a golf course in the same town as his first home. Mike incurred $6,000 in moving expenses. How much of this can he include as an itemized deduction?

 

An itemized deduction of $800 with a 33 percent tax rate would reduce a person's taxes by:

 

Haley Thomas has adjusted gross income of $40,000. She paid $4,700 in property taxes during the year. How much of the tax can she include as an itemized deduction?

 

A person who owes total federal income taxes of $4,500 but had total withholdings of $3,980 would:

 

The standard deduction is a set amount on which no taxes are paid.  For 2018, single people receive a standard deduction of:

 

Taxes are only considered as financial planning activities in April.

 

The principal purpose of taxes is to control economic conditions.

 

A state may impose a personal property tax.

 

Real-estate property taxes are a major source of revenue for local governments.

 

A general sales tax is also referred to as an excise tax.

 

A tax on the value of automobiles, boats, or furniture is referred to as a personal property tax.

 

An estate tax is imposed on the value of an individual’s property at the time of his or her death.

 

Money received in the form of dividends or interest is commonly called “earned income.”

 

An exclusion is earnings not included in taxable income.

 

Exemptions are deductions for yourself, your spouse, and qualified dependents that you can deduct from adjusted gross income.

 

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

 

A person’s filing status is affected by marital status and dependents.

 

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

 

Tax avoidance refers to illegal actions to reduce one’s taxes.

 

Capital gains refer to profits from the sale of investments.

 

The main purpose of taxes is to:

 

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

 

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

 

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

 

Taxable income is used to compute a person’s:

 

Interest earnings of $1,600 from a taxable investment for a person in a 28 percent tax bracket would result in after-tax earnings of:

 

A $2,000 deposit to a tax-deferred retirement account for a person in a 25 percent tax bracket would result in a reduced tax bill of:

 

When a taxpayer’s income increases $1,000 and the taxes owed increases from $7,867 to $8,177, the marginal tax rate is ______ percent.

 

A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent.

 

A person has $4,000 in medical expenses and an adjusted gross income of $32,000. If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income, what would be the amount of the deduction in this situation?

 

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

 

Money received by an individual for personal effort is classified as ______________ income.

 

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

 

Earnings from a limited partnership would be an example of ____________ income.

 

Which one of the following is not included in gross income?

 

Which of the following would be deducted from gross income to obtain adjusted gross income?

 

George Washburn had earnings from his salary of $34,000, interest on savings of $800, a contribution to a traditional individual retirement account of $1,500, and dividends from mutual funds of $600. George’s adjusted income (AGI) would be:

 

An exclusion affects a person’s taxes by:

 

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in:

 

Tax-deferred retirement plans are a type of:

 

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

 

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

 

_____________ are expenses that a taxpayer is allowed to deduct from adjusted gross income.

 

A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is:

 

Michele Walsh is considering an additional charitable contribution of $2,000 to a taxdeductible charity, bringing her total itemized deductions to $16,000. If Michele is in a 28 percent tax bracket, how much will this $2,000 contribution reduce her taxes?

 

An exemption affects a person’s tax situation by:

 

Which of the following would qualify a person for an exemption when computing taxable income?

 

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

 

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

 

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person’s taxes by:

 

Most people pay federal income tax by:

 

Estimated quarterly tax payments must be made by people who:

 

A taxpayer whose spouse recently died is most likely to use the ____________ filing status.

 

The “head of household” filing status is for people who are:

 

Which form would an individual use who has less than $100,000 in taxable income from wages, salaries, tips, unemployment compensation, interest, or dividends, and who is married and does not itemize deductions?

 

The Form 1040 is most helpful to a person who:

 

Which one of the following people is least likely to have to file a federal income tax return?

 

Itemized deductions are recorded on:

 

A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:

 

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

 

Which type of audit is the least complicated for taxpayers?

 

Which one of these terms is defined as the use of legitimate methods to reduce one’s taxes?

 

Union dues, fees for tax return preparation, and other miscellaneous expenses are:

 

Which one of the following is most apt to qualify as an itemized deduction?

 

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

 

Which one of these investments produces tax-exempt income?

 

Capital gains refer to:

 

A short-term capital gain is profit earned on an investment that is:

 

Which one of these statements correctly applies to a Roth IRA?

 

An itemized deduction of $500 with a 36 percent tax rate would reduce a person’s taxes by:

 

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

 

John Camey goes into a local department store and purchases a new suit. He pays $43 in taxes on this purchase. What type of tax is this most likely to be?

 

The state of Oklahoma imposes a tax of $.17 per gallon on gasoline. What type of tax is this most likely to be?

 

Tim Bridges owns a bass fishing boat. His state imposes an annual 3.25 percent tax on the current value of this boat. What type of tax is this most likely to be?

 

Drew Davis earns $4,500 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?

 

Elizabeth Gleason just died. At the time of her death the total value of her assets was $150,000. The federal government collected $7,500 in taxes based on this value. What type of tax is this most likely to be?

 

Mr. and Mrs. Keating want to give their son Dudley a total of $24,000. They each write him a check for $12,000 so they won’t have to pay any gift tax. This is an example of:

 

Kim Ye is single and earns $40,000 in taxable income. He uses the following tax rate schedule to calculate the taxes he owes.

Calculate the dollar amount of estimated taxes that Kim owes.

 

Joan Sanchez is single and earns $40,000 in taxable income. She uses the following tax rate schedule to calculate the taxes she owes.

What is Joan’s marginal tax rate?

 

Al Barkley is single and earns $40,000 in taxable income. He uses the following tax rate schedule to calculate the taxes he owes.

What is Al’s average tax rate?

 

Alex Bates goes on Jeopardy and earns $875,000 in winnings. What type of income is this?

 

Randal Ice has adjusted gross income of $32,000. He has medical expenses for the year of $6000. How much of these expenses can he deduct from adjusted gross income?

 

Haley Thomas has adjusted gross income of $40,000. She paid $3,600 in property taxes during the year. How much of the tax can she deduct from adjusted gross income?

 

Mike Hansen has adjusted gross income of $28,000. During the year, Mike decided he needed a larger home. He purchased a home on a golf course in the same town as his first home. Mike incurred $7,500 in moving expenses. How much of this can he deduct from adjusted gross income?

 

Maryellen Epplin worked in Poland for part of the year and earned $50,000 while she was there. This income will not be included in her taxable income for the year. This represents a tax:

 

Elaine’s Embroidery Emporium which is run out of Elaine’s home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid. What type of IRS audit is this?

 

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

 

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

 

Which one of the following is a retirement plan that allows a $5,000 annual contribution with tax-free earnings after five years?

 

The interest paid on which type of loan is not tax deductible?

 

Approximately what percent of tax filers are audited each year?

 

Ms. Nelson is a single mom with three children; Dana is 18 and a high school senior, Derrick is 20 and a college sophomore, and Tonya is 25 and unemployed. All three children live at home. How many exemptions can Ms. Nelson claim on her tax return?

 

Many taxpayers with high incomes and high amounts of deductions must pay an additional tax referred to as the ________________ tax.

 

Not included in the recent tax credits is a/an _______________ tax credit.

 

Thomas Franklin claimed an additional $3,000 in deductions he knowingly knew he did not qualify for so he could reduce his tax bill. This is referred to as tax:

 

Michael closed on his new home December 31, 2009 instead of January 1, 2010. As a result, Michael

 

Mary Watson bought 20 shares of stock one and half years ago. She recently sold her stock making a profit of $1,400. She is in the 28% tax bracket. Her tax on this investment is:

 

Tim Bridges owns a fishing boat. His state imposes an annual 3.25 percent tax on the current value of this boat. What type of tax is this most likely to be?

 

Which of the following good or service is subject to an excise tax?



The principal purpose of taxes is to:



Which type of tax is imposed on specific goods and services, such as gasoline and cigarettes, at the time of purchase?



A taxable investment produced interest earnings of $1,200. A person in a 22 percent tax bracket would have after-tax earnings of:



Ms. Nelson is a single mom with three children who live at home. She earned less than $40,000 in 2018. What is the maximum amount of earned income tax credit that she may qualify for?



Kim Lee is single and earns $32,000 in taxable income. He uses the following tax rate schedule to calculate the taxes he owes.
Up to $9.52510% $9,525 − $38,70012% $38,700 − $82,50022% $82,500 − $157,50024%
Calculate the dollar amount of estimated taxes that Kim owes.



Union dues, tax preparation fees, and other miscellaneous expenses are:



Which statement is true regarding a tax credit?



The interest paid on which type of loan is not tax deductible?



Money received in the form of dividends or interest is commonly called:



Earnings from a limited partnership would be an example of ____________ income.



For tax years prior to 2018, a deduction from adjusted gross income for yourself, your spouse, and qualified dependents was termed:



An itemized deduction of $800 with a 33 percent tax rate would reduce a person's taxes by:



Taxable income is used to compute the amount of:



Which one of the following is most likely to qualify as an itemized deduction?



The "head of household" filing status is for someone who is:



A person who owes total federal income taxes of $3,450 but had total withholdings of $3,125 would:



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



Approximately what percent of tax filers are audited each year?



A short-term capital gain is profit earned on an investment that is:



Mary Watson bought 20 shares of stock two years ago. She recently sold her stock making a profit of $1,400. Long-term capital gain rates are 15% for her income level. She is in the 22% tax bracket. Her tax on this investment is:



Which one of these investments produces tax-exempt income?



Which one of these statements correctly applies to a Roth IRA?



Michael closed on his new home December 31, 2018 instead of January 1, 2019. As a result, Michael:



In recent years, how many states have not had a general sales tax?



Elizabeth Gleason just died. At the time of her death the total value of her assets was $150,000. The federal government collected $7,500 in taxes based on this value. What type of tax is this most likely to be?



Personal property taxes may tax the value of:



An excise tax is imposed by the federal and state governments on all of the following specific goods, except:



Joan Sanchez is single and earns $40,000 in taxable income. She uses the following tax rate schedule to calculate the taxes she owes.
Up to $9.52510% $9,525 - $38,70012% $38,700 - $82,50022% $82,500 - $157,50024%
What is Joan's marginal tax rate?



Which one of the following is included in gross income?



Which one of the following would reduce gross income to obtain adjusted gross income?



The Tax Cuts and Jobs Act allows owners of a sole proprietor or partnership to deduct up to _____ percent of the income earned by the business from their individual return to arrive at taxable income beginning in 2018.



When a taxpayer's income increases $1,000 and the taxes owed increases from $7,850 to $8,200, the marginal tax rate is ______ percent.



Money received in the form of dividends or interest is commonly called:



Haley Thomas has adjusted gross income of $40,000. She paid $4,700 in property taxes during the year. How much of the tax can she include as an itemized deduction?



The Affordable Care Act of 2010, or Obamacare, required taxpayers to pay a tax penalty if they were not able to confirm that they had health care coverage. This penalty has been eliminated by the Tax Cuts and Jobs Act for tax years starting in:



Money received by an individual for personal effort is classified as ______________ income.



Although you should generally keep tax records for 3 years from the date you file your return, you may be held responsible for providing back documentation up to:



Estimated quarterly tax payments must be made by people who:



For 2018, which form would a married individual with less than $100,000 in taxable income use to file his federal income tax return?



In 2018, the Form 1040 is not appropriate for someone who:



Which type of audit is the simplest and most common for taxpayers?



Capital gains refer to:



The interest is deductible on your tax return for which of the following?



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



A tax on the value of automobiles, boats, or furniture is referred to as: