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| 1 | |
You earn a salary of $5500 a month and your employer withholds $2500 a month in income and social security taxes on this salary. This is an example of: |
| | A) | Taxes on purchases |
| | B) | Taxes on property |
| | C) | Taxes on wealth |
| | D) | Taxes on earnings |
| | E) | None of the above |
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| 2 | |
2. You own 1000 share of Abbot Laboratories and they paid you a dividend of $.94 per share last year. This money is part of: |
| | A) | Earned income |
| | B) | Investment income |
| | C) | Passive income |
| | D) | Other income |
| | E) | None of the above |
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| 3 | |
3. You are single and earn a salary of $40,000 for the year. You have earned $1000 in interest income on some corporate bonds that you own. You have earned $1500 in dividends for the year. Finally you earned a bonus this year of $5000. In addition, during the year you make a contribution to IRA of $2000. What is your adjustable gross income for this year? |
| | A) | $40,000 |
| | B) | $34,500 |
| | C) | $30,500 |
| | D) | $45,500 |
| | E) | None of the above |
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| 4 | |
4. Your adjusted gross income is $34,500. You have $12,000 in medical expenses for the year. What would be your itemized deduction for your medical expenses? |
| | A) | $12,000 |
| | B) | $9412.50 |
| | C) | $2587.50 |
| | D) | $0 |
| | E) | None of the above |
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| 5 | |
5. You are single and earn $35,000 during the year and have interest and dividend income of $4000. You have medical expenses totaling $9000 during the year, make charitable contributions of $2500, have job related expenses of $2000 and have mortgage interest of $3000. What is your taxable income? |
| | A) | $39,000 |
| | B) | $26,205 |
| | C) | $22,500 |
| | D) | $23,105 |
| | E) | $19,400 |
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| 6 | |
6. A dollar of tax credit has: |
| | A) | A larger effect than a dollar of deductions |
| | B) | A smaller effect than a dollar of exemptions |
| | C) | A smaller effect than a dollar of deductions |
| | D) | The same effect as a dollar of deductions |
| | E) | Cannot be determined from the above information |
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| 7 | |
7. You have calculated that you owe $16,075 in taxes for the year. During this same year you had $18,350 in withholding. You: |
| | A) | Owe an additional $2275 to the federal government by April 15th. |
| | B) | Have a refund of $2275 from the federal government. |
| | C) | Owe an additional $16,075 to the federal government by April 15th. |
| | D) | Have a refund of $16,075 from the federal government. |
| | E) | None of the above. |
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| 8 | |
8. An audit that requires a visit to your home, business or accountants office which can be used to verify whether an individual has an office in the home is called: |
| | A) | A correspondence audit |
| | B) | An office audit |
| | C) | A field audit |
| | D) | A face-to-face audit |
| | E) | None of the above |
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| 9 | |
9. Which of the following is not likely to be an allowable deduction (either in whole or part) for federal income taxes? |
| | A) | The $2.50 per day in tolls that you pay to drive to and from your office at work every day. |
| | B) | The $1500 you pay to attend a conference to further your career. |
| | C) | The $15,000 in medical expenses you incurred during the year |
| | D) | The $2000 in moving expenses you incurred in moving from Florida to North Carolina for a new job. |
| | E) | All of the above are allowable deductions. |
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| 10 | |
Interest income from __________ which are issued by state and local governments are not subject to federal income taxes. |
| | A) | Treasury bonds |
| | B) | Corporate bonds |
| | C) | Municipal bonds |
| | D) | Treasury bills |
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