Question 1

Medicare is a government health insurance program that covers people over age 55 and provides payments to health care providers in case of illness.

Accepted Answer

Medicare covers people over the age of 65, not 55.

Question 2

Knowledge of individual income taxes is crucial to sound financial planning.

Accepted Answer

Understanding individual income taxes can help individuals make informed financial decisions, such as how much to save for retirement and how to structure investments. It can also help minimize tax liability and avoid penalties for non-compliance.

Question 3

A branch of the U.S.Treasury Department,called the ________,administers the federal tax system.
A)U)S.Department of Tax
B)Internal Revenue Service
C)U)S.Tax Authority
D)U)S.Department of Collection

Accepted Answer

The Internal Revenue Service (IRS) is a branch of the U.S. Treasury Department that administers the federal tax system, including collecting taxes and enforcing tax laws. The other choices listed are not accurate names of branches within the U.S. Treasury Department.

Question 4

Knowledge of tax laws can help you conserve your income.

Accepted Answer

Knowledge of tax laws can help individuals and businesses to better understand tax deductions, credits, exemptions, and other strategies that can be utilized to minimize tax liability and maximize income. This can ultimately result in conserving more of your income.

Question 5

________ is withheld at a rate of 6.2% on the first $102,000 of your earnings.

Accepted Answer

The answer of ________ is withheld at a rate of...

Question 6

The Tax Relief Act of 2001 provided educational incentives to a broad range of taxpayers and reduced contribution limits to retirement plans.

Accepted Answer

The answer of The Tax Relief Act of 2001 provided...

Question 7

Self-employed individuals pay FICA taxes at a rate of
A)1)45 percent.
B)7)65 percent.
C)15.3 percent.
D)20.9 percent.

Accepted Answer

Self-employed individuals are responsible for both the employer and employee portions of FICA taxes, which total to 15.3% (12.4% for Social Security and 2.9% for Medicare).

Question 8

Your gross wages are subject to FICA (Federal Insurance Contributions Act)taxes that fund the Social Security system and Medicare.

Accepted Answer

FICA taxes do indeed fund the Social Security system and Medicare, and are therefore applied to gross wages.

Question 9

Which of the following taxes is only paid on the first $102,000 of your salary?
A)Federal Income Tax
B)Social Security Tax
C)Medicare Tax
D)All of the above.

Accepted Answer

Only the Social Security Tax is limited to the first $102,000 of your salary. Federal Income Tax and Medicare Tax do not have an income limit.

Question 10

Taxpayers can have more than the minimum amount of required income tax withheld from each pay.

Accepted Answer

Taxpayers can choose to have additional income tax withheld from each paycheck if they wish to ensure they do not owe taxes at the end of the year. This can be done by adjusting their W-4 form with their employer.

Question 11

If you have a salary of $30,000,an IRA deduction of $2,000,a standard deduction of $4,400,and a FICA rate of 7.65 percent,how much did you pay in FICA this year?
A)$1,805
B)$1,958
C)$2,142
D)$2,295

Accepted Answer

The answer of If you have a salary of $30,000,an...

Question 12

FICA taxes include two components,which consist of
A)accident and disability insurance.
B)unemployment compensation and disability insurance.
C)retirement and Medicare contributions.
D)old age and unemployment compensation.

Accepted Answer

FICA taxes consist of two components - Social Security (retirement) and Medicare contributions.

Question 13

There is no Social Security tax on income beyond a certain level.

Accepted Answer

The 2021 limit is $142,800, beyond which there is no Social Security tax.

Question 14

The knowledge of tax laws can help you
A)conserve your income.
B)enhance your investments.
C)protect the transfer of your wealth at your death.
D)All of the above.

Accepted Answer

Understanding tax laws allows individuals to make informed decisions about their income, investments, and estate planning, which can lead to the conservation of income, enhancement of investments, and protection of wealth for transfer at death.

Question 15

The Tax Relief Act of 2001
A)raised the tax rates for the highest income portion of the population.
B)limits further the ability to contribute to retirement plans tax-free.
C)provided educational incentives to most taxpayers.
D)reduced the childcare credit available to most young families.

Accepted Answer

The Tax Relief Act of 2001 provided educational incentives such as the expansion of education savings accounts and the introduction of the Hope and Lifetime Learning tax credits. It did not raise tax rates for the highest income portion of the population or limit retirement plan contributions. It also did not reduce the childcare credit available to most young families.

Question 16

Medicare taxes are 1.45% of your salary,regardless of the salary amount.

Accepted Answer

Medicare taxes are calculated at a rate of 1.45% on all earnings up to a certain limit, regardless of the salary amount.

Question 17

Employers have an option of whether or not to match an employee's Social Security and Medicare taxes.

Accepted Answer

Employers are required by law to match their employees' Social Security and Medicare taxes as part of their payroll tax obligations.

Question 18

Which of the following statements is not true regarding FICA taxes paid?
A)These taxes fund both Social Security and Medicare
B)Employers are required to match employee FICA contributions
C)All FICA taxes apply to your total income
D)There is a limit on how much of your income will be taxed for Social Security

Accepted Answer

FICA taxes only apply to a specific portion of your income, which is currently up to $142,800 for Social Security taxes in 2021. Any income above that amount is not subject to Social Security taxes, although it is still subject to Medicare taxes.

Question 19

Students and other taxpayers earning less than $100,000 a year with no dependents are eligible to file the simplest tax return,which is the 1040E-Z.

Accepted Answer

The statement is true. Taxpayers earning less than $100,000 a year with no dependents are eligible to file the simplest tax return, which is the 1040E-Z.

Question 20

Determining taxes requires you to address all of the following topics except
A)gross income.
B)daily living expenses.
C)deductions.
D)exemptions.

Accepted Answer

Daily living expenses do not necessarily factor into calculating taxes. Gross income, deductions, and exemptions are all important factors in determining taxes.

Quiz 4: Using Tax Concepts for Planning

Medicare is a government health insurance program that covers people over age 55 and provides payments to health care providers in case of illness.

Knowledge of individual income taxes is crucial to sound financial planning.

A branch of the U.S.Treasury Department,called the ________,administers the federal tax system.

Knowledge of tax laws can help you conserve your income.

________ is withheld at a rate of 6.2% on the first $102,000 of your earnings.

The Tax Relief Act of 2001 provided educational incentives to a broad range of taxpayers and reduced contribution limits to retirement plans.

Self-employed individuals pay FICA taxes at a rate of

Your gross wages are subject to FICA (Federal Insurance Contributions Act)taxes that fund the Social Security system and Medicare.

Which of the following taxes is only paid on the first $102,000 of your salary?

Taxpayers can have more than the minimum amount of required income tax withheld from each pay.

If you have a salary of $30,000,an IRA deduction of $2,000,a standard deduction of $4,400,and a FICA rate of 7.65 percent,how much did you pay in FICA this year?

FICA taxes include two components,which consist of

There is no Social Security tax on income beyond a certain level.

The knowledge of tax laws can help you

The Tax Relief Act of 2001

Medicare taxes are 1.45% of your salary,regardless of the salary amount.

Employers have an option of whether or not to match an employee's Social Security and Medicare taxes.

Which of the following statements is not true regarding FICA taxes paid?

Students and other taxpayers earning less than $100,000 a year with no dependents are eligible to file the simplest tax return,which is the 1040E-Z.

Determining taxes requires you to address all of the following topics except