Question 1

Reductions from gross income for such items as registered retirement account contributions and RESP payments will result in

Accepted Answer

A)   business income
B)   taxable income.
C)   earned income.
D)   net income.
E)   total exclusions.F) A) and D)
G) B) and E)

Question 2

Which of the following people is least likely to have to file a federal income tax return?

Accepted Answer

A)   a person earning $8,750
B)   a person earning $10, 750
C)   a person earning less than $9,600
D)   a person over age 65
E)   a college studentF) A) and E)
G) B) and E)

Question 3

An example of a non-refundable tax credit is

Accepted Answer

A)   interest on a credit card or charge account.
B)   certain job-related travel expenses.
C)   the cost of commuting to work.
D)   life insurance premiums.
E)   student loan interest fees.F) A) and C)
G) A) and B)

Question 4

Cameron Nelson wants to complete his own federal income tax return. He has several questions about the tax form to use and what items should be reported as income. What sources of assistance would you recommend for Cameron?

Accepted Answer

Both the CCRA and the Québec Ministère d...

Question 5

____________ are expenses that a taxpayer is allowed to deduct from total income.

Accepted Answer

A)   Exemptions
B)   Exclusions
C)   Deductions
D)   Tax credits
E)   Passive incomeF) B) and D)
G) B) and C)

Question 6

Which type of tax expert would be of most value when you have a difference of opinion with the tax department?

Accepted Answer

A)   an enrolled agent
B)   a nationally-chartered tax preparer
C)   a CA
D)   a tax accountant
E)   a tax attorneyF) A) and B)
G) A) and C)

Question 7

A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:

Accepted Answer

A)   receive a refund of $4,550.
B)   owe $8,325.
C)   owe $375.
D)   receive a refund of $8,325.
E)   receive a refund of $375.F) B) and C)
G) A) and C)

Question 8

In 2009, Glenn is allowed to contribute $5,000 to a TFSA. He contributes $2,000 for that year. If he withdraws $1,000 the same year from the TFSA account, the following year:

Accepted Answer

A)   $3,000 contribution room is added to the 2010 TFSA limit
B)   the TFSA limit for 2010 is unchanged
C)   the TFSA limit for 2010 is reduced by $1,000
D)   $4,000 contribution room is added to the 2010 TFSA limit
E)   $1,000 is added to taxable income for 2010F) All of the above
G) None of the above

Question 9

Taxes are not only considered in financial planning in April.

Accepted Answer

A) True 
 B)False

Question 10

An RRSP, RPP, and IPP are examples of

Accepted Answer

A)   tax-exempt retirement plans.
B)   tax-deferred retirement plans.
C)   capital gains.
D)   self-employment insurance programs.
E)   job-related expenses that are tax deductible.F) B) and D)
G) None of the above

Question 11

The basic personal amount is

Accepted Answer

A)   the standard deduction.
B)   a tax credit.
C)   an itemized deduction.
D)   an exclusion.
E)   an exemption.F) C) and E)
G) C) and D)

Question 12

Taxable income is used to compute a person's

Accepted Answer

A)   exemptions.
B)   income tax.
C)   deductions.
D)   tax credit.
E)   exclusions.F) All of the above
G) A) and E)

Question 13

What is the difference between the marginal tax rate and the average tax rate? In most cases, which rate is less? If your taxable income in 2004 was $50,000, what would be your federal taxes, marginal tax rate and average tax rate?

Accepted Answer

Marginal tax rate is the rate of tax pai...

Question 14

The main purpose of taxes is to

Accepted Answer

A)   create jobs
B)   reduce the chances of inflation.
C)   generate revenue for funding government programs.
D)   discourage use of certain goods and services.
E)   decrease competition from foreign companies.F) A) and D)
G) B) and D)

Question 15

A tax credit is an amount subtracted directly from the amount of taxes owed.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   $10.
B)   $28.
C)   $14.
D)   $50.
E)   $35.F) A) and E)
G) All of the above

Question 17

The use of legitimate methods to reduce one's taxes is tax ____________.

Accepted Answer

A)   evasion
B)   avoidance
C)   exemptions
D)   deferred techniques
E)   reductionsF) None of the above
G) A) and B)

Question 18

Taxable income is the total earnings of a person.

Accepted Answer

A) True 
 B)False

Question 19

Income from a partnership is included under net business income.

Accepted Answer

A) True 
 B)False

Question 20

An RPP differs from an RRSP in that

Accepted Answer

A)   earnings on the RPP are tax free after five years.
B)   contributions may exceed $2,000 in the RRSP.
C)   an RRSP is set up by an employer for an employee.
D)   An RPP is set up by an employer for an employee.
E)   funds are only to be used for education expensesF) A) and B)
G) B) and E)

Exam 3: Planning Your Tax Strategy

Which of the following people is least likely to have to file a federal income tax return?

Correct AnswerverifiedShow Answer

An example of a non-refundable tax credit is

Correct AnswerverifiedShow Answer

Taxes are not only considered in financial planning in April.

Correct AnswerverifiedShow Answer

Reductions from gross income for such items as registered retirement account contributions and RESP payments will result in

Correct AnswerverifiedShow Answer

The use of legitimate methods to reduce one's taxes is tax ____________.

Correct AnswerverifiedShow Answer

Cameron Nelson wants to complete his own federal income tax return. He has several questions about the tax form to use and what items should be reported as income. What sources of assistance would you recommend for Cameron?

Correct AnswerverifiedBoth the CCRA and the Québec Ministère d...View AnswerShow Answer

Which type of tax expert would be of most value when you have a difference of opinion with the tax department?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the difference between the marginal tax rate and the average tax rate? In most cases, which rate is less? If your taxable income in 2004 was $50,000, what would be your federal taxes, marginal tax rate and average tax rate?

Correct AnswerverifiedMarginal tax rate is the rate of tax pai...View AnswerShow Answer

In 2009, Glenn is allowed to contribute $5,000 to a TFSA. He contributes $2,000 for that year. If he withdraws $1,000 the same year from the TFSA account, the following year:

Correct AnswerverifiedShow Answer

Taxable income is the total earnings of a person.

Correct AnswerverifiedShow Answer

Income from a partnership is included under net business income.

Correct AnswerverifiedShow Answer

The basic personal amount is

Correct AnswerverifiedShow Answer

An RPP differs from an RRSP in that

Correct AnswerverifiedShow Answer

____________ are expenses that a taxpayer is allowed to deduct from total income.

Correct AnswerverifiedShow Answer

Taxable income is used to compute a person's

Correct AnswerverifiedShow Answer

An RRSP, RPP, and IPP are examples of

Correct AnswerverifiedShow Answer

A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:

Correct AnswerverifiedShow Answer

A tax credit is an amount subtracted directly from the amount of taxes owed.

Correct AnswerverifiedShow Answer

The main purpose of taxes is to

Correct AnswerverifiedShow Answer

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Both the CCRA and the Québec Ministère d...
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Marginal tax rate is the rate of tax pai...
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