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| 1 | |
In general, the tax rate schedules and tax tables are set up to tax higher levels of income at higher tax rates than lower levels of income. |
| | A) | True |
| | B) | False |
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| 2 | |
Capital gains are always taxed at a lower rate than ordinary income. |
| | A) | True |
| | B) | False |
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| 3 | |
The alternative minimum tax system requires higher-income taxpayers to be taxed at an alternative, higher tax rate on the regular income tax base to determine the amount of the alternative minimum tax. |
| | A) | True |
| | B) | False |
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| 4 | |
Taxpayers are allowed to deduct personal and dependency exemptions for alternative minimum tax purposes. |
| | A) | True |
| | B) | False |
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| 5 | |
Employees must pay the Social Security tax on all of their wages and Medicare tax on wages up to a fixed amount. |
| | A) | True |
| | B) | False |
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| 6 | |
The American opportunity credit applies to qualifying education expenses for the first four years of post secondary education. |
| | A) | True |
| | B) | False |
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| 7 | |
A taxpayer must have both earned income in excess of the standard deduction and at least one qualifying dependent to qualify for the earned income credit. |
| | A) | True |
| | B) | False |
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| 8 | |
In certain circumstances, in the current year, a taxpayer may need to pay in more than 100% of her prior year tax liability to avoid estimated tax penalties. |
| | A) | True |
| | B) | False |
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| 9 | |
Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule? |
| | A) | Head of Household |
| | B) | Qualifying Widow or Widower |
| | C) | Married Filing Separately |
| | D) | Unmarried |
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| 10 | |
Henry is single. In 2010, he reported $30,000 of taxable income, including a long-term capital gain of $10,000. At what rate will his long-term capital gain be taxed (use the tax rate schedules)? |
| | A) | 0% |
| | B) | 10% |
| | C) | 15% |
| | D) | 25%0 |
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| 11 | |
In 2010, Wilma (who files as a head of household) reported regular taxable income of $150,000. She itemized her deductions, deducting $10,000 in charitable contributions and $2,000 in state income taxes. She claimed exemptions for herself and her two sons, Romulus and Remus, ($3,650 each). What is Wilma's alternative minimum taxable income? |
| | A) | $139,050 |
| | B) | $150,000 |
| | C) | $152,950 |
| | D) | $162,950 |
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| 12 | |
Christine has a regular tax liability of $22,500 and a tentative minimum tax of $20,000. Given just this information, what is her alternative minimum tax liability for the year? |
| | A) | $0 |
| | B) | $2,500 |
| | C) | $20,000 |
| | D) | $42,500 |
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| 13 | |
Ian earned $150,000 of salary as an employee in 2010. How much should his employer have withheld from his paycheck for FICA taxes (rounded to the nearest whole dollar amount)? |
| | A) | $2,175 |
| | B) | $8,797 |
| | C) | $10,849 |
| | D) | $11,475 |
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| 14 | |
Which of the following suggests that a working taxpayer is an employee rather than an independent contractor? |
| | A) | Works for only one firm |
| | B) | Working hours set for taxpayer |
| | C) | Works on employer premises |
| | D) | All of the above suggest employee status |
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| 15 | |
Boyd and Susan are married filing jointly in 2010. They have three children for whom they may claim the child tax credit. Their AGI was $115,000. What amount of child tax credit may they claim on their 2010 tax return? |
| | A) | $0 |
| | B) | $3,000 |
| | C) | $2,750 |
| | D) | $250 |
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