U.E.T Taxila

COURSE TITLE : FREE 101

TRUE/FALSE QUESTIONS 1 TO 29

Chapter 3

1)Tax Freedom Day represents the day that the average person works until to pay their taxes each year

2. An example of an excise tax is Social Security.                                 
3. Individuals are allowed to give money or items of any value to a person without being subject to taxes.

4. Amounts given for tuition payments or medical expenses are not subject to gift taxes.                                             
5. Determining Adjusted Gross Income is the final step in calculating federal income tax.
6. Cash and prizes won on television game shows are usually subject to both federal and state taxes.
7. The Adjusted Gross Income is increased by the itemized or standard deduction.                                          

8. When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.
9. The itemized deduction allowed for an individual 65 and older is higher than the itemized deduction for a younger taxpayer.                                           
10. When Marissa completes her taxes, she can include her children, her husband, and herself as exemptions.                          
11. Tax tables list average tax rates.                      
12. The average tax rate is the taxes paid on the next dollar of income.                                            
13. All individuals with taxable income need to complete the AMT calculation.                                               
14. A tax credit has a full dollar effect in lowering taxes.                                            
15. A tax credit reduces the taxable income on which the tax liability is computed.                                             
16. If your taxes due are greater than the amount you had withheld for the year, then you should expect a refund after you complete your federal income taxes.                                                      
17. Individuals who have high income reported on Form 1099 may be required to pay estimated tax payments.
18. Federal income tax returns must be filed by April 1 of each year.                                                  
19. Form 4868 allows a taxpayer to obtain a six-month extension on filing and paying federal taxes without penalty.                                   
20. All citizens of the United States are required to file a federal income tax return if their income falls below a certain level.                                                      
21. Most states do not require state income taxes.                                    
22. Tax software can save taxpayers 25 hours or more when preparing Form 1040.                                                     
23. The IRS has made online filing free for millions of taxpayers through the Free File Alliance.

24. Tom needs to complete his taxes. He should be able to find a tax preparation service to complete his tax forms for as little as $15.                                
25. A common filing error is signing the return.                             
26. Some tax disputes have been escalated to the U.S. Supreme Court.                                           
27. One of the best tax shelters is owning a car.                           

28. Interest paid on a home equity loan is not deductible.                                       
29. Contributions to a Keogh or 401(k) are tax-exempt.                                            

30. A worker's primary goal should be to
31. Which of the following is NOT a tax that most people pay?
32. A tax due on the purchase of gasoline is called a(n)
33. A tax imposed on the value of a person's property at the time of death is called a(n)

34. This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.
35. The tax that is a major source of revenue for local governments is called a(n)                                            
36. Payroll deductions for federal government retirement benefits (such as old-age, survivor, and disability) are called
37. The amount owed on property received from a deceased person is
38. The maximum amount (in 2009) that an individual can give another in a year without being subject to federal taxes is:
39. You may be required to make estimated tax payments if:
40. When calculating federal income taxes, "income" includes all of the following categories except

41. When calculating federal income taxes, what increases "income"?
42. Income that is never subject to tax is called
43. Income that is taxed at a later date is
44. Gross income after certain reductions have been made is
45. Fees, tips, and bonuses are forms of
46. Total income (gross) includes
47. Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?
48. Adjustments to income include all except
49. Individuals can deduct expenses only in excess of 7.5 percent of adjusted gross income for

50. Athena wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is NOT a proper deduction?
51. Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction?
52. How long should you generally keep tax records?

53. Fred has been completing his own tax returns for years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation?

54. When Paul completes his taxes, he can include all of the following as exemptions except

55. In 2008, taxable income was reduced by                                         for each exemption claimed.

56. In 2008, federal tax tables included tax rates of:
57. The taxes based on the total tax due divided by taxable income is called
58. The tax designed to ensure that those who receive tax breaks also pay their fair share of taxes is called
59. The tax due on the next dollar of income is referred to as the
60. Tanya is a single low-income working parent and Fred is a single high-income working parent. Because of her status, Tanya, but not Fred, may be eligible for the
61. Which of the following is NOT a tax credit?
62. Recent tax credit include all except

63. At the end of the year, employees receive a                                 form that reports annual earnings and the amounts deducted for taxes from their employer.
64. At the end of the year, Xavier received a form from his employer that reports annual earnings and the amounts deducted for taxes. That form is called a                                                 
65. At the end of the year, Yvonne received a form from her bank that reports income from her savings. That form is called                                                   
66. At the end of the year, Walter received a form that showed his payments from independent contracting. That form is called                                   
67. Penny knows that she needs to file her taxes, but is unable to do so by April 15. What form does she need to complete to obtain an automatic six-month extension?
68. Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for Nancy?
69. Bob was married to Sandy and they have a 12 year old son. Sandy passed away last year. Bob needs to complete his federal income taxes for the year. What filing status could he use because of his marital status?
70. Which of the following is NOT a valid form for filing federal income taxes?
71. Peter filed his federal income taxes, but needs to make a correction to his income. Which form should he use?
72. Amanda and Jack are working on their taxes and need to determine which form to file. They had wages, interest, and dividends. In addition they bought a house this past year and are thinking of itemizing their deductions. Which form should he use?

73. The major sections of Form 1040 include all except
74. Individuals can file their federal taxes using
75. Tax resources include all except
76. Who is ultimately responsible for supplying accurate and complete information for the completing of a tax return?
77. An IRS agent visited Henry's home to verify some information on his tax return. This visit was called
78. Annie was required to clarify or document minor questions of her tax form by mail. She participated in
79. If Brenda wants to pay her fair share of taxes, no more and no less, she should practice
80. Connie thinks that her salary and tax rate for next year will be lower than for this year. What step should

she take to minimize her taxes in the current year?

81. David thinks that his salary and tax rate for next year will be higher than for this year. What step should he take to minimize his taxes.
82. Which of the following is NOT an action that can reduce your taxes?
83. All of the following can reduce your taxes today except investing in