Question 11 Retirement investments can easily be made with unearned income. afte

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Question 11

Retirement investments can easily be made with

unearned income.

after-tax dollars.

pretax income.

tax refunds.

Question 12

Maxine Marshall received $24,000 in disability payments from an insurance policy she paid for. How much of the $24,000 is included in Maxine's gross income?

$0

$12,000

$24,000

$6,000

Question 13

You pay personal taxes on your calculated ____ income.

adjusted gross

taxable

gross

marginal

Question 14

Which of the following is an example of unearned income?

Wages

Tips

Interest

Both interest and tips

Question 15

A federal tax reform proposal that would implement a national sales tax to replace all or a portion of the federal income tax is called the

value-added tax.

proportional tax.

flat tax.

progressive tax.

Question 16

All income other than capital gains is referred to as

earned income.

gross income.

personal income.

ordinary income.

Question 17

Numerous job-related expenses can potentially be deducted from federal income taxes as ____ expenses.

charitable

interest

tax

miscellaneous

Question 18

A way to defer income taxes to later years is to

contribute to defined-contribution retirement plans.

defer income.

contribute to individual retirement accounts.

all of these.

Question 19

Joe and Maria, a married couple with three young children, have a gross income of $120,000, adjustments of $6,700, and itemized deductions totaling $16,900. If personal exemptions for the year are $3,700 each and the standard deduction is $11,600 for married couples, what is Joe and Maria's taxable income if they file jointly?

$66,300

$77,900

$81,600

$83,400

Question 20

Total itemized deductions must be ____ to reduce your tax liability.

greater than your standard deduction

greater than 5 percent of your adjusted gross income

greater than 7.5 percent of your adjusted gross income

less than your taxable income

A.

unearned income.

B.

after-tax dollars.

C.

pretax income.

D.

tax refunds.

Explanation / Answer

Question 11

Retirement investments can easily be made with

A. unearned income.

Unearned income is any income that comes from investments and other sources not related to employment services. Examples of unearned income include interest from a savings account, bond interest and dividends from stock.

Question 12

Maxine Marshall received $24,000 in disability payments from an insurance policy she paid for. How much of the $24,000 is included in Maxine's gross income?

A. $0

Individual disability income insurance benefits are tax free. However, you can't deduct premiums paid for individual disability income insurance as a medical expense.

Question 13

You pay personal taxes on your calculated ____ income.

B. Taxable

Question 14

Which of the following is an example of unearned income?

Answer

D. Both interest and tips

Unearned income is any income that comes from investments and other sources not related to employment services.

Question 15

A federal tax reform proposal that would implement a national sales tax to replace all or a portion of the federal income tax is called the

A. value-added tax.

The FairTax is a proposal to reform the federal tax code of the United States. It would replace all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales. The Fair Tax Act would apply a tax, once, at the point of purchase on all new goods and services for personal consumption.

Question 16

All income other than capital gains is referred to as

D. ordinary income.

Question 17

Numerous job-related expenses can potentially be deducted from federal income taxes as ____ expenses.

D. miscellaneous

Question 18

A way to defer income taxes to later years is to

D. all of these.

Question 19

Joe and Maria, a married couple with three young children, have a gross income of $120,000, adjustments of $6,700, and itemized deductions totaling $16,900. If personal exemptions for the year are $3,700 each and the standard deduction is $11,600 for married couples, what is Joe and Maria's taxable income if they file jointly?

Answer : Unable to answer as dependency exemption is not given.

Question 20

Total itemized deductions must be ____ to reduce your tax liability.

A. greater than your standard deduction

If the itemized deductions are greater than the standard deduction, then income taxes owed will be lower.

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