Question 1

Michael's brother,Thomas,lives with Michael in his own home.Thomas has a full-time job and pays his brother for rent and utilities.Michael's filing status is
A) single.
B) head of household.
C) married, filing separately.
D) a qualifying widow(er).

Accepted Answer

Since Thomas is Michael's brother and not a qualifying person for Head of Household status, and there's no indication Michael is married or a widow(er), the correct filing status is Single.

Question 2

Stephanie,who was divorced in 2015,had filed a joint tax return with her husband in 2014.During 2015,she did not remarry and continued to maintain her home in which her three dependent children lived.In preparation of her 2015 tax return,Stephanie should file as
A) single.
B) head of household.
C) married filing separately.
D) qualifying widow(er).

Accepted Answer

Stephanie can file as head of household since she did not remarry, maintained a home where her dependent children lived for more than half the year, and was not considered married at the end of the tax year.

Question 3

Under the Affordable Care Act of 2010,if an individual does not have medical insurance coverage in 2016,they will
A) still not have to pay 100% of their medical expenses if they cannot afford them.
B) be subject to a tax penalty of up to 2.5% of income or $695 per adult.
C) only have to pay 75% of billed medical expenses.
D) be subject to a $250 fine.

Accepted Answer

Under the Affordable Care Act of 2010, if an individual does not have medical insurance coverage in 2016, they will be subject to a tax penalty of up to 2.5% of income or $695 per adult. This penalty is designed to incentivize individuals to obtain health insurance coverage. Option A and C are inaccurate, as there is no provision for partial payment of medical expenses under the ACA. Option D is also incorrect, as the penalty for not having health insurance is much higher than $250.

Question 4

All interest and dividends received by an individual taxpayer are taxable.

Accepted Answer

The answer of All interest and dividends received by an...

Question 5

If you are a married taxpayer,you may use the ________ filing status.
A) single
B) married filing jointly or married filing separately
C) head of household
D) Any of the above may be used.

Accepted Answer

As a married taxpayer, the best choices for filing status are either married filing jointly or married filing separately. This depends on the couple's unique financial situation and should be determined by calculating their taxes owed under each filing status. The other options (single and head of household) would not be applicable to married taxpayers.

Question 6

Different tax rates are associated with each filing status such as single,married filing jointly,and head of household.

Accepted Answer

Different tax rates are indeed associated with each filing status. For example, the tax brackets and deductions for a single taxpayer filing their taxes may differ from those of a married couple filing jointly or a person filing as head of household.

Question 7

All taxpayers have a large degree of freedom in choosing their filing status.

Accepted Answer

Taxpayers must meet specific IRS criteria to qualify for a particular filing status, such as single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with dependent child. These criteria are based on marital status, household composition, and financial support provided, limiting the degree of freedom in choosing a filing status.

Question 8

If you are a surviving spouse,you may continue to use the married filing jointly tax rates unless
A) you are divorced and your ex-spouse died in the last five years.
B) your spouse died in the last two years.
C) you have children you can claim as an exemption.
D) you pay more than half the cost of maintaining your residence.

Accepted Answer

The answer of If you are a surviving spouse,you may...

Question 9

If you are married with two children and your two elderly parents live with you in an "in-law" suite,but pay a nominal rent monthly,you should file as
A) married filing separately.
B) married filing jointly with 4 total personal exemptions.
C) married filing jointly with 6 total personal exemptions.
D) married filing jointly with parents.

Accepted Answer

The answer of If you are married with two children...

Question 10

Gross income consists of all reportable income from any source.

Accepted Answer

Gross income includes all reportable income, including wages, salaries, tips, interest, dividends, rental income, and more.

Question 11

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

Accepted Answer

This is true according to the Internal Revenue Service (IRS) definition of a long-term capital gain.

Question 12

If you are working part time while going to school and have no dependents other than yourself,do not itemize deductions and have no capital asset transactions,which Federal Income Tax return form should you file?
A) 1040EZ
B) 1120
C) 1040X
D) Since you are part time and make just a few thousand dollars, you do not need to file an income tax return.

Accepted Answer

If you are working part-time and have no dependents, no capital asset transactions, and do not want to itemize deductions, you can file Form 1040EZ. This form is the simplest tax form, and it is designed for people with straightforward tax situations.

Question 13

Which of the following is not a tax filing status option?
A) Single
B) Divorced
C) Married filing jointly
D) Head of household

Accepted Answer

The tax filing status options are Single, Married filing jointly, Married filing separately, Head of household, and Qualifying widow/widower with dependent child. Divorced is not a tax filing status option.

Question 14

To qualify for "head of household" you must
A) be single.
B) have at least one dependent in your household.
C) be a homeowner.
D) Both A and B are correct.

Accepted Answer

To qualify as "head of household," you must be unmarried or considered unmarried on the last day of the year and have paid more than half the cost of keeping up a home for the year, which must also be the main home for you and at least one qualifying person (dependent). Homeownership is not a requirement.

Question 15

Employee contributions to qualified Individual Retirement Accounts (IRAs)and interest paid on student loans are adjusted from gross income to calculate a taxpayer's adjusted gross income.

Accepted Answer

This is correct, employee contributions to qualified IRAs and interest paid on student loans are both deductions that are used to calculate a taxpayer's adjusted gross income.

Question 16

The timing on the sale of an investment asset earning a capital gain makes little or no difference in the amount of taxes that are owed.

Accepted Answer

The timing of the sale of an investment asset can have a significant impact on the amount of taxes owed. If the asset is held for more than one year before being sold, it will be subject to long-term capital gains tax rates, which are typically lower than short-term rates for assets held for less than one year. Additionally, if the sale of the asset results in a net capital gain, the tax owed can be offset by any capital losses from other investments.

Question 17

________ is withheld at a rate of 6.2% on the first $118,500 of your 2015 earnings.

Accepted Answer

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

Question 18

Lucky Louie's base salary is $90,000 per year and he earns an additional $75,000 in annual bonus.Luckily,Lucky only has to pay FICA on
A) his base salary.
B) his base salary plus bonus up to the annual legal withholding limit for FICA.
C) all of his earnings.
D) $130,000.

Accepted Answer

FICA taxes are only withheld on income up to a certain limit each year. For 2021, the limit is $142,800. Lucky's base salary alone is under this limit, so he would only have to pay FICA taxes on that amount. However, if his total income (including the bonus) exceeds the limit, he would have to pay FICA on the portion of the bonus that exceeds the limit. Therefore, the best choice is option B, which states that FICA is only paid on Lucky's base salary plus bonus up to the annual FICA withholding limit.

Question 19

Jerry is divorced and has two children that live with him.What filing status should Jerry claim on his tax return?
A) Single
B) Head of household
C) Married filing separately
D) Married filing jointly

Accepted Answer

Jerry can claim head of household filing status since he has a qualifying dependent, namely his two children, living with him for more than half of the year and he is unmarried or considered unmarried on the last day of the year. This filing status will provide him with a higher standard deduction and lower tax rate compared to the single filing status.

Question 20

Assume you are still single and have no children,but your two siblings live with you in your home,you should file as
A) single.
B) head of household with two dependents.
C) single with two dependents.
D) single filing separately.

Accepted Answer

Since you are single and your siblings are not your dependents, you should file as single.

Quiz 4: Using Tax Concepts for Planning

Michael's brother,Thomas,lives with Michael in his own home.Thomas has a full-time job and pays his brother for rent and utilities.Michael's filing status is

Stephanie,who was divorced in 2015,had filed a joint tax return with her husband in 2014.During 2015,she did not remarry and continued to maintain her home in which her three dependent children lived.In preparation of her 2015 tax return,Stephanie should file as

Under the Affordable Care Act of 2010,if an individual does not have medical insurance coverage in 2016,they will

All interest and dividends received by an individual taxpayer are taxable.

If you are a married taxpayer,you may use the ________ filing status.

Different tax rates are associated with each filing status such as single,married filing jointly,and head of household.

All taxpayers have a large degree of freedom in choosing their filing status.

If you are a surviving spouse,you may continue to use the married filing jointly tax rates unless

If you are married with two children and your two elderly parents live with you in an "in-law" suite,but pay a nominal rent monthly,you should file as

Gross income consists of all reportable income from any source.

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

If you are working part time while going to school and have no dependents other than yourself,do not itemize deductions and have no capital asset transactions,which Federal Income Tax return form should you file?

Which of the following is not a tax filing status option?

To qualify for "head of household" you must

Employee contributions to qualified Individual Retirement Accounts (IRAs)and interest paid on student loans are adjusted from gross income to calculate a taxpayer's adjusted gross income.

The timing on the sale of an investment asset earning a capital gain makes little or no difference in the amount of taxes that are owed.

________ is withheld at a rate of 6.2% on the first $118,500 of your 2015 earnings.

Lucky Louie's base salary is $90,000 per year and he earns an additional $75,000 in annual bonus.Luckily,Lucky only has to pay FICA on

Jerry is divorced and has two children that live with him.What filing status should Jerry claim on his tax return?

Assume you are still single and have no children,but your two siblings live with you in your home,you should file as