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Exam 4: Planning Your Tax Strategy

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Question 51

Multiple Choice

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Al Barkley is single and earns $40,000 in taxable income.He uses the following tax rate schedule to calculate the taxes he owes. What is Al's average tax rate?

A) 15.45%
B) 18.27%
C) 21.35%
D) 23.87%
E) 25.00%

F) D) and E)
G) None of the above

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Question 52

Multiple Choice

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Drew Davis earns $4,500 per month from his job at Cisco Systems;$900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

A) general sales tax
B) excise tax
C) personal property tax
D) income tax
E) estate tax

F) All of the above
G) A) and C)

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Question 53

Multiple Choice

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Estimated quarterly tax payments must be made by people who:

A state may impose a personal property tax.

George Washburn had earnings from his salary of $34,000,interest on savings of $800,a contribution to a traditional individual retirement account of $1,500,and dividends from mutual funds of $600.George's adjusted income (AGI) would be:

Which one of the following is a retirement plan sponsored by an employer?

Capital gains refer to:

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes by:

What are the advantages of a 401K?

A allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical and child care costs.

The state of Oklahoma imposes a tax of $.17 per gallon on gasoline.What type of tax is this most likely to be?

Real-estate property taxes are a major source of revenue for local governments.

How is taxable income computed?

Mike Hansen has adjusted gross income of $28,000.During the year,Mike decided he needed a larger home.He purchased a home on a golf course in the same town as his first home.Mike incurred $7,500 in moving expenses.How much of this can he deduct from adjusted gross income?

What factors determine whether a taxpayer will use the Form 1040EZ,Form 1040A,or Form 1040?

A general sales tax is also referred to as an excise tax.

Ms.Nelson is a single mom with three children;Dana is 18 and a high school senior,Derrick is 20 and a college sophomore,and Tonya is 25 and unemployed.All three children live at home.How many exemptions can Ms.Nelson claim on her tax return?