Chapter 3 preparing your taxes

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Chapter 3 Preparing Your Taxes
Principles of Finance (Trường Đại học Ngoại thương)

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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
1. The federal personal income tax is a progressive tax.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
2. The federal personal income tax is a flat tax.

a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
3. Tax avoidance is legal, tax evasion is illegal.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-5 - LO: 3-5
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:

STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
4. One's marginal tax rate is typically lower than one's average tax rate.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:

Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
5. One's average tax rate is typically lower than one's marginal tax rate.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
6. If you have any earned income, you are required to file a tax return.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate

LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
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Chapter 3—Preparing Your Taxes
KEYWORDS:

Bloom's: Remembering

7. The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes
you pay.
a. True
b. Fals
e
ANSWER:
True
POINTS:

1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-6 - LO: 3-6
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Understanding
8. If you are eligible to receive a tax refund, you will have to file a tax return to get the refund.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
9. Income tax refunds are automatically sent to those who qualify for refunds no later than April 15.

a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
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Chapter 3—Preparing Your Taxes
RDS:
KEYWORDS:

Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

10. As a single taxpayer with no dependents, one is generally eligible to file as "head of household."
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
11. Russ and Lois got married December 30. Although they were single for most of the year, they can legally file as
married taxpayers in the year of the wedding.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:

NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
12. Dwayne and Gayle were divorced September 29, have not remarried, and have no dependents. Their filing status for
the year will each be "married" since they were married for more than half of the year.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
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Chapter 3—Preparing Your Taxes
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills

NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
13. If you are married, you can legally file a single tax return.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
14. A spouse and spouse is the only couple combination that can file a joint return.
a. True
b. Fals
e
ANSWER:
True

POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
15. The tax brackets (rates) and payments for married couples filing separately are now typically close to the same as for
joint filers.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
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Chapter 3—Preparing Your Taxes
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

PFIN.BILL.17.3-1 - LO: 3-1
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

16. The Internal Revenue Service is responsible for making changes to the federal income tax codes.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:

STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
17. Congress considers tax law changes throughout the year.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
18. Social security taxes are deducted from all wages and salaries earned in a year.
a. True
b. Fals
e
ANSWER:
False
POINTS:

1
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Chapter 3—Preparing Your Taxes
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

Moderate
PFIN.BILL.17.3-1 - LO: 3-1
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

19. Social security taxes are paid on earned income but not on investment income.
a. True

b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
20. There is no limit on the amount of social security tax withheld annually.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial

RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
21. The Medicare portion of the FICA tax is paid on 100% of earnings.
a. True
b. Fals
e
ANSWER:
True
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Chapter 3—Preparing Your Taxes
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

1
Moderate
PFIN.BILL.17.3-1 - LO: 3-1
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

22. Your marital status will affect the amount of social security you must pay in a year.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
23. Child support received is included in gross income.
a. True
b. Fals

e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
24. Alimony received is included in gross income for the receiver and deducted from gross income for the payer.
a. True
b. Fals
e
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
ANSWER:

POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

True
1
Moderate
PFIN.BILL.17.3-2 - LO: 3-2
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

25. Gifts received from family and friends are included in gross income.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2

JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
26. Gross income minus tax exempt income equals adjusted gross income.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
27. Dividends received from the stock you own will be taxable income.
a. True
b. Fals
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Chapter 3—Preparing Your Taxes
e
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

True
1
Moderate
PFIN.BILL.17.3-2 - LO: 3-2
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

28. Qualified dividends are taxed at the same rates as long-term capital gains.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
29. Portfolio-related expenses can be written off against passive income.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:

NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
30. A short-term capital gain would be taxed at the same rate as your salary.
a. True
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Chapter 3—Preparing Your Taxes
b. Fals
e
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:

KEYWORDS:

True
1
Challenging
PFIN.BILL.17.3-2 - LO: 3-2
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

31. A long-term capital gain is taxed at the same rate as ordinary income.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering

32. The sale of your home will rarely result in a taxable capital gain.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
33. An investment must be owned over one year in order to qualify for long-term capital gains treatment.
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Chapter 3—Preparing Your Taxes
a. True

b. Fals
e
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

True
1
Easy
PFIN.BILL.17.3-2 - LO: 3-2
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

34. An investment must be owned over two years in order to qualify for long-term capital gains treatment.
a. True
b. Fals
e
ANSWER:
False
POINTS:

1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
35. To receive the most favorable capital gains treatment, a taxpayer must own and occupy a home for at least two of the
five years prior to its sale.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering

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Chapter 3—Preparing Your Taxes
36. Adjustments to income will decrease your taxable income.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
37. Itemized deductions could include certain taxes, medical expenditures, and home mortgage interest.
a. True

b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Applying
38. You should itemize deductions when total itemized deductions exceed the standard deduction.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial

RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
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Chapter 3—Preparing Your Taxes
KEYWORDS:

Bloom's: Analyzing

39. You should itemize deductions when total itemized deductions are less than the standard deduction.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:

STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
40. Mortgage interest and paid home property taxes are both itemized deduction items.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
41. State income taxes and real estate taxes are both itemized deduction items.
a. True
b. Fals
e
ANSWER:
True
POINTS:

1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
KEYWORDS:

United States - AK - DISC: Taxes
Bloom's: Remembering

42. A tax deduction is more valuable than a tax credit.
a. True
b. Fals
e
ANSWER:
False

POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-3 - LO: 3-3
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
43. Federal income taxes paid can be deducted the following year.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering

44. Personal exemptions are deductions from AGI based on the number of persons supported by the taxpayer's income.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
45. The personal exemption for a student can be taken both by the parent and by the child.
a. True

b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
46. When a child qualifies as a dependent on her parent's return, the child cannot take a personal exemption for herself.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial

RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
47. The alternative minimum tax is designed to ensure that individuals with many deductions and tax-shelter investments
are paying their fair share of taxes.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-3 - LO: 3-3
JECTIVES:
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:

Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
48. Tax credits are dollar-for-dollar reductions in taxes due.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-3 - LO: 3-3
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
49. Estimated tax payments must be made by those who do not have taxes deducted from their earnings.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy

LEARNING OB PFIN.BILL.17.3-3 - LO: 3-3
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
50. A person with a significant amount of investment income would have a high probability of needing to make estimated
tax payments.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Moderate
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
LEARNING OB

JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

PFIN.BILL.17.3-3 - LO: 3-3
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Applying

51. All taxpayers have an equal probability of having their tax returns audited.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-4 - LO: 3-4
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows

United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
52. You have up to three years after mailing your tax return to file an amended tax return (1040X).
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-4 - LO: 3-4
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
53. If your AGI is less than $100,000 and you do not itemize deductions, the IRS will compute your taxes for you.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

Easy
PFIN.BILL.17.3-4 - LO: 3-4
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

54. A married couple filing a joint return has Ms. Cindy Cook, a CPA, complete their return. The IRS will hold only Ms.
Cook responsible for any errors on the return.
a. True
b. Fals
e

ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-4 - LO: 3-4
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
55. Marginal tax and average tax rate refer to the same thing.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows

United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
56. If you earn less than $15,000, you probably pay more in social security taxes than in federal income taxes.
a. True
b. Fals
e
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:

True
1
Challenging
PFIN.BILL.17.3-1 - LO: 3-1

United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes

57. Opening a traditional IRA would allow you to defer taxes on the earnings.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-6 - LO: 3-6
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
58. Opening a traditional IRA would allow you to take advantage of tax-free earnings.
a. True
b. Fals
e
ANSWER:
False
POINTS:

1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-6 - LO: 3-6
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
59. Tax-deferred income is better than tax-free income.
a. True
b. Fals
e
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lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:

NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

False
1
Challenging
PFIN.BILL.17.3-6 - LO: 3-6
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Analyzing

60. Municipal bond investments typically provide tax-free interest income.
a. True
b. Fals
e
ANSWER:
True
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-6 - LO: 3-6
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial

RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
61. Most any wage earner can open an IRA and contribute up to $7,500 of tax-deferred income each year to the account.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
62. Tax avoidance is a legal means to minimize tax liabilities.
a. True
b. Fals
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Chapter 3—Preparing Your Taxes
e
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

True
1
Easy
PFIN.BILL.17.3-6 - LO: 3-6
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

63. Tax evasion is a legal means to avoid tax liabilities.
a. True
b. Fals

e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-6 - LO: 3-6
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
64. Persons who work for more than one employer in any year will owe more social security taxes than if all their income
was earned from a single employer.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Challenging
LEARNING OB PFIN.BILL.17.3-1 - LO: 3-1
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial

RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
65. A taxpayer claiming himself and one dependent had personal exemptions in 2014 amounting to $7,900.
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Chapter 3—Preparing Your Taxes
a. True
b. Fals
e
ANSWER:
POINTS:
DIFFICULTY:
LEARNING OB
JECTIVES:
NATIONAL STA
NDARDS:
STATE STANDA
RDS:
KEYWORDS:

True

1
Easy
PFIN.BILL.17.3-2 - LO: 3-2
United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
Analysis and Cash Flows
United States - AK - DISC: Taxes
Bloom's: Remembering

66. The regular income tax filing deadline is April 1 of each year.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Easy
LEARNING OB PFIN.BILL.17.3-4 - LO: 3-4
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
67. By filing a tax extension, one does not have to pay his income tax liability until October 15.
a. True
b. Fals

e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-4 - LO: 3-4
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Remembering
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Page 23


lOMoARcPSD|10289698

Chapter 3—Preparing Your Taxes
68. Income shifting refers to the process of transferring income from the taxpayer to the IRS.
a. True
b. Fals
e
ANSWER:

False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-6 - LO: 3-6
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes
KEYWORDS: Bloom's: Analyzing
69. The standard deduction in 2014 for a single filer was $6,500 and for married persons filing jointly was $13,000.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY: Moderate
LEARNING OB PFIN.BILL.17.3-2 - LO: 3-2
JECTIVES:
NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
NDARDS:
STATE STANDA United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
RDS:
Analysis and Cash Flows
United States - AK - DISC: Taxes

KEYWORDS: Bloom's: Remembering
70. Most major software providers have free online versions for preparing federal taxes for all taxpayers.
a. True
b. Fals
e
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECT PFIN.BILL.17.3-5 - LO: 3-5
IVES:
NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills
RDS:
STATE STANDARDS United States - KS - DISC: Financial Analysis and Cas - DISC: Financial
:
Analysis and Cash Flows
KEYWORDS:
Bloom's: Remembering
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Page 24