Question 1

Ben and Jack both earned $60,000 this year.Ben (age 30)is married with two children,and Jack (age 68)is single with no dependents.Which of the following is true regarding the amount of Social Security taxes they will have to pay?

Accepted Answer

Both Ben and Jack will have to pay the same amount of Social Security taxes because the tax rate is the same for all workers regardless of their marital status, age, or number of dependents.

Question 2

The _____ income is gross income less the tax deductions and payments for insurance and retirement savings.

Accepted Answer

Take-home income refers to the amount of money an individual receives after all deductions, including taxes, insurance, and retirement savings, have been subtracted from their gross income.

Question 3

Mark is not married and has dependent parents.He pays more than half of the cost of keeping up a home for himself and his parents.His tax filing status is _____.

Accepted Answer

Mark can qualify as head of household because he is unmarried, paid more than half the cost of keeping up a home, and his parents are his dependents. This tax filing status has lower tax rates than single taxpayers and offers a higher standard deduction.

Question 4

Molly and Jason were married.Their only dependent was Spot,their black standard poodle.Jason died in 2014.Assuming Molly does not remarry,the only legal filing status for Molly in 2015 will be:

Accepted Answer

The answer of Molly and Jason were married.Their only dependent...

Question 5

John and Charlotte are considering contributing $1,000 to their church.This contribution will bring their total itemized deductions to $2,000.Assuming they are in the 15% marginal tax bracket,how much will they save in taxes by contributing the $1,000 to their church?

Accepted Answer

Since their total itemized deductions ($2,000) are less than the standard deduction, they will not benefit from itemizing, and thus will not save any taxes from the contribution.

Question 6

In 2015,the total Social Security tax rate was:

Accepted Answer

The Social Security tax rate for 2015 was 6.2%, and the Medicare tax rate was 1.45%. When combined, the total Social Security tax rate was 7.65%. However, self-employed individuals were responsible for paying both the employee and employer portions of the taxes, bringing the total rate to 15.3%.

Question 7

Diana sold mutual fund shares,which she had owned for 4 years,so that she could use the proceeds to travel across Europe with her son.Diana is in the 35 percent marginal tax bracket,and her capital gains from the sale were $30,000.Diana's tax liability on the gain is _____.

Accepted Answer

The answer of Diana sold mutual fund shares,which she had...

Question 8

Sarah is a homeowner and a single taxpayer.She has owned and occupied the house as a principal residence for the last 8 years.In the current taxable year,she receives a promotion.She sells her home and moves to another area.The capital gain on the sale of the principal residence will:

Accepted Answer

Under the current tax law, if Sarah has owned and occupied her house as a principal residence for at least 2 out of the last 5 years, she is eligible for a capital gains exclusion of up to $250,000 ($500,000 if married filing jointly) on the sale of the property. Therefore, the capital gain on the sale of Sarah's principal residence will be taxable excluding the first $250,000 of the gain.

Question 9

Which of the following statements is true of the tax levied under the Federal Insurance Contributions Act (FICA)?

Accepted Answer

The tax levied under the Federal Insurance Contributions Act (FICA) is paid equally by the employer and employee. This tax funds Social Security and Medicare programs. Self-employed persons also pay this tax in the form of the Self-Employment Contributions Act (SECA). It is not applicable to property tax or insurance against theft, and it is not limited to federal employees.

Question 10

Your take-home pay is what you are left with after subtracting withholdings from your:

Accepted Answer

Your take-home pay is what you actually receive after taxes and other deductions have been taken out of your gross earnings. Therefore, answer choice A is correct because it subtracts withholdings from your gross earnings. The other answer choices do not accurately describe how take-home pay is calculated.

Question 11

_____ would be considered a part of your taxable income.

Accepted Answer

A gain from the sale of your assets is generally considered part of your taxable income. The other options listed (A, B, C, and E) are generally not considered taxable income, although there may be some exceptions or caveats depending on individual circumstances.

Question 12

Taxable income is calculated by:

Accepted Answer

Taxable income is calculated by subtracting adjustments, the larger of itemized or standard deductions, and exemptions from gross income.

Question 13

Which of the following is subject to federal income tax?

Accepted Answer

Alimony received is subject to federal income tax.

Question 14

Your income tax withholding is dependent on:

Accepted Answer

Income tax withholding is dependent on the amount of income you earn and the number of allowances you claim (which are based on factors such as your marital status, number of dependents, etc.). Other factors such as age, education, and spouse's deductions do not directly impact income tax withholding.

Question 15

Mandi and Thomas were married and had a child aged 7 in 2014.Mandi died in 2014,leaving Thomas a single parent.The most favorable filing status for Thomas in 2015 will be:

Accepted Answer

Thomas can file as a qualifying widower for the tax year 2015 if he has a dependent child and has not remarried. This filing status allows him to use the same tax rates as married filing jointly and may result in a lower tax liability compared to filing as single or head of household.

Question 16

Molly and Justin are considering contributing $5,000 to a tax-deductible charity.This contribution will bring their total itemized deductions to $20,000.Assuming they are in the 28% marginal tax bracket,how much will they save in taxes by contributing the $5,000 to charity?

Accepted Answer

The answer of Molly and Justin are considering contributing $5,000...

Question 17

Tom sold mutual fund shares,which he had owned for 3 years,so that he could use the proceeds to return to college.Tom is in the 15% marginal tax bracket,and his capital gain from the sale was $11,000.How much tax does Tom owe on the gain?

Accepted Answer

The answer of Tom sold mutual fund shares,which he had...

Question 18

You would typically include _____ in your gross income.

Accepted Answer

Income from pensions is typically included in your gross income, as it is considered taxable income by the IRS. Child-support payments, life insurance death benefit payments, municipal bond interest, and personal exemptions are not considered taxable income and thus are not included in gross income.

Question 19

A capital gain is the result of:

Accepted Answer

A capital gain is the profit made by selling an asset for more than its purchase price.

Question 20

Murray (age 68,single)sold his home owned for 35 years so that he could relocate to a place that is closer to where his grandchildren live.He realized a $400,000 capital gain on the home.Murray's tax liability on capital gain is computed on _____.

Accepted Answer

The answer of Murray (age 68,single)sold his home owned for...

Quiz 3: Preparing Your Taxes

Ben and Jack both earned $60,000 this year.Ben (age 30) is married with two children,and Jack (age 68) is single with no dependents.Which of the following is true regarding the amount of Social Security taxes they will have to pay?