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| 1 | |
The tax rate is applied against the tax base to determine the amount of tax liability. |
| | A) | True |
| | B) | False |
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| 2 | |
The average tax rate is the taxable income divided by the total tax liability. |
| | A) | True |
| | B) | False |
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| 3 | |
Joe is an employee of Adams Company. Joe properly completed his Form 1040EZ tax return and was required to pay the IRS $3,244 at the time of filing. Joe's tax liability for the year is $3,244. |
| | A) | True |
| | B) | False |
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| 4 | |
The amount of tax liability calculated using the tax tables will always be the same as the amount calculated using the tax rate schedules. |
| | A) | True |
| | B) | False |
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| 5 | |
Legislative regulations do not have the full effect of law. |
| | A) | True |
| | B) | False |
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| 6 | |
A state or local sales tax is an example of a: |
| | A) | Progressive rate structure. |
| | B) | Proportional rate structure. |
| | C) | Regressive rate structure. |
| | D) | Recessive tax structure. |
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| 7 | |
A tax rate that increases as the tax base increases is an example of what kind of tax rate structure? |
| | A) | Progressive |
| | B) | Proportional |
| | C) | Regressive |
| | D) | Recessive |
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| 8 | |
Jake earned $15,000 and paid $1,500 of income tax, while Jill earned $40,000 and paid $6,000 of income tax. The tax rate structure they are subject to is: |
| | A) | Progressive |
| | B) | Proportional |
| | C) | Regressive |
| | D) | Recessive |
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| 9 | |
Xavier is single and has taxable income of $68,000 that is taxed as follows:
| $7,825 x 10% = | $ 782.50 | | ($31,850-$7,825) x 15% = | 3,603.75 | | ($68,000-$31,850) x 25%= | 9,037.50 | | | -------------- | | Total Tax | $13,423.75 |
Rounded to the nearest percent, his average tax rate is: |
| | A) | 10%. |
| | B) | 15% |
| | C) | 20% |
| | D) | 25%. |
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| 10 | |
Xavier is single and has taxable income of $68,000 that is taxed as follows:
| $7,825 x 10% = | $ 782.50 | | ($31,850-$7,825) x 15% = | 3,603.75 | | ($68,000-$31,850) x 25%= | 9,037.50 | | | -------------- | | Total Tax | $13,423.75 |
His marginal tax rate is: |
| | A) | 10%. |
| | B) | 15% |
| | C) | 20% |
| | D) | 25%. |
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| 11 | |
With respect to the income tax formula, which of the following statements is incorrect? |
| | A) | The simplified income tax formula is only applicable to taxpayers with taxable income less than $100,000. |
| | B) | Taxpayers are allowed certain deductions from income. |
| | C) | For many taxpayers, the simple income tax formula is sufficient to determine tax liability. |
| | D) | When calculating the tax refund or tax due with the return taxpayers need to subtract tax payments and tax credits from their tax liability. |
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| 12 | |
Which of the following would disqualify a taxpayer from filing a Form 1040EZ |
| | A) | have total taxable income under $100,000 |
| | B) | be under age 65 and not blind |
| | C) | have no dependents |
| | D) | have interest income more than $2,000 |
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| 13 | |
On Form 1040EZ, the permitted deduction from income for married taxpayers is: |
| | A) | $ 8,750 |
| | B) | $10,000 |
| | C) | $12,150 |
| | D) | $17,500 |
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| 14 | |
Victoria determined her tax liability was $6,451. Her employer withheld $6,145 from her paychecks during the year. Victoria's tax return would show |
| | A) | a refund of $306 |
| | B) | a refund of $6,451 |
| | C) | tax due of $306 |
| | D) | tax due of $6,145 |
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| 15 | |
For equivalent amounts of taxable income, the total tax liability of a couple using the married filing jointly status will be |
| | A) | less than single filing status |
| | B) | more than single filing status |
| | C) | more than married filing separately status |
| | D) | cannot be determined with the information provided |
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| 16 | |
Sonya is an employee of Valley Company. Alice properly completed her Form 1040EZ tax return and received a refund from the IRS of $1,244. Alice had income tax withholdings during the year of $4,782. Alice's tax liability for the year was |
| | A) | $ 1,244 |
| | B) | $ 3,538 |
| | C) | $ 4,782 |
| | D) | $ 6,026 |
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| 17 | |
The tax liability for a married couple with taxable income of $72,489 is: |
| | A) | $11,966 |
| | B) | $10,970 |
| | C) | $14,543 |
| | D) | $14,546 |
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| 18 | |
Which of the following types of Regulations take the place of the Internal Revenue Code and have the full effect of law? |
| | A) | Final. |
| | B) | Legislative. |
| | C) | Temporary. |
| | D) | Proposed. |
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| 19 | |
The following court hears only tax cases. |
| | A) | U.S. Court of Appeals. |
| | B) | U.S. Court of Federal Claims. |
| | C) | U.S. District Court. |
| | D) | U.S. Tax Court. |
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| 20 | |
Federal tax legislation generally originates in what body? |
| | A) | Senate Finance Committee. |
| | B) | Supreme Court. |
| | C) | Internal Revenue Service. |
| | D) | House Ways and Means Committee. |
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