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What is the taxable amount of social security income reported on the tax return if a single taxpayer's income included only $9,400
in social security benefits and $150 in interest income?
 
$4,775.
$4,700.
$7,990.
$0
   
Working condition fringes include:
 
Professional organization dues paid by the employer.
Bonus earned by the employee.
The use of an employer-provided vehicle for business purposes.
Professional organization dues paid by the employer and the use of an
employer-provided vehicle for business purposes
   
For purposes of computing the amount of savings bond interest exempt from tax, Modified AGI is adjusted gross income plus:
 
deduction for student loan interest.
deduction for moving expenses.
itemized deductions.
standard deduction
   
Items that must be reported on line 21 (Other Income) of the Form 1040 include:
 
Wages.
Jury duty pay
Capital gains.
Tax-exempt dividends.
   
What item should not be included in income?
 
Worker's compensation payments
Jury duty pay.
Prizes and awards.
Sick pay.
   
For tax purposes, one of the requirements to recognize income is:
 
The transaction does not have to be completed.
The income cannot be tax-exempt
The transaction does not have to have an economic benefit.
None of these.
   
Corporate distributions to shareholders that represent a nontaxable return of capital are those that are:
 
made from current year's profit of the corporation.
made from accumulated retained earnings of the corporation.
made from the excess over earnings and profits of the corporation
made from the bank account of the corporation.
   
When an individual's marginal ordinary income tax rate is 25% or more and less than 39.60%, the tax rate on qualified dividends is:
 
5%.
15%
0%.
10%.
   
A married, filing jointly taxpayer's lower limit of provisional income for social security purposes is:
 
$44,000.
$25,000.
$34,000.
$32,000
   
Interest income on Series EE and Series E U.S. Savings Bonds can be reported:
 
only at the maturity date of the bond issue.
only on an annual basis.
either at the maturity date or on an annual basis
No need to report; this type of interest income is always tax-exempt income.
   
Federal income taxes are regressive.
 
False
   
Consumption taxes are taxes on goods and services.
 
True
   
On a local level, taxes pay for services such as education, parks, roads, and police, fire, and health departments.
 
True
   
In the United States, both businesses and individuals pay income taxes and must file income tax returns each year.
 
True
   
Revenue bills must pass a vote in the Senate and then be signed by the President before they become law.
 
False
   
When government spends more than it receives in revenue, it has a surplus.
 
False
   
In the United States, all citizens are expected to prepare and file tax returns on their own without being forced to do so by the government.
 
True
   
If you file a joint tax return, you can take an exemption for your spouse.
 
True
   
Only married taxpayers qualify for the head of household filing status.
 
False
   
All forms of income are taxable and must be reported to the IRS for tax purposes.
 
False
   
Gross income is the income on which you will pay tax.
 
False
   
You do not need to file a tax return if you are over the age of 65.
 
False
   
Most people will probably use either Form 1040EZ or Form 1040A to file their first tax return.
 
True
   
Even if you hire a professional tax preparer, you are responsible for supplying accurate and complete tax information.
 
True
   
By law, only professional tax preparers may use tax preparation software.
 
False
   
Debt instruments issued by state and local governments are not taxable for federal income tax purposes.
 
True
   
True or false: In general, prizes awarded to taxpayers are excluded from gross income
 
False
   
The largest source of government revenue in the United States is
 
income taxes
   
A tax for which the rate stays the same, regardless of income, is called a
proportional tax
   
In the United States, the power to impose federal taxes rests with
 
the Congress
   
In this kind of audit, the IRS sends a letter to the taxpayer, asking him or her to answer specific questions about the tax return.
 
correspondence audit
   
Which of the following is an example of a flat tax?
 
property tax
   
In the United States, the responsibility for filing a tax return rests with the individual. This defines the concept of
 
voluntary compliance
   
Your filing status on your tax return is based on
your marital status
   
Which of the following is an example of non-taxable income?
 
life insurance benefits
   
A tax _____ is an amount subtracted directly from the tax owed.
 
credit
   
You must file your tax return by this date every year.
 
April 15
   
Incoming funds to the government are called
 
revenue
   
_________________ taxes take a larger share of income as the amount of income grows.
 
progressive
   
Sales taxes on specific goods and services, such as gasoline or cigarettes, are called_____________taxes.
 
excise
   
Willful failure to pay taxes is called tax
 
evasion
   
Tax rates apply to different income ranges, or tax ________.
 
brackets
   
A(n)_________________is an amount you may subtract from your income for each person who depends on your income to live.
 
exemption
   
Someone who lives with you and for whom you pay more than half of his/her living expenses is called a(n)
 
dependent
   
All the taxable income you receive is called_________income.
 
gross
   
Money paid to support a former spouse is called
 
alimony
   
Money paid to a former spouse for support of dependent children is called____________________support.
 
child
   
Ryan earned $17,000 at his job last year. He pays 15 percent of his income as taxes. What amount did Ryan pay in taxes last year?
 
$2,550
   
Sales tax in your community is 6 percent. If you go to a sporting goods store and buy a soccer ball for $19.95,
socks for $5.95, and a headband for $10.00, what amount will you pay once the sales tax is added to your purchase?
 
$38.05
   
Sue earned $21,000 at her waitress job last year; she also made $7,000 in tips. In addition, Sue earned $95
interest on her savings account and received a $500 gift from her father. Find Sue's gross income for the year.
 
$28,095
   
Use the following information to calculate a taxpayer's taxable income:


Gross income: $13,000
Adjustments: $750
Standard deduction: $5,350
Exemptions: $3,400
 
$3,500
   
Use the following information to calculate a taxpayer's adjusted gross income:


Gross income: $15,000
Adjustments: $950
Itemized deductions: $6,000
Exemptions: $3,400
 
$14,050