CAPÍTULO 5. MÉTODO DE INVESTIGACIÓN
5.1. Estudio Piloto
5.1.3. Batería Piloto de Instrumentos
1) Tax credits reduce your taxes on a dollar-for-dollar basis.
Answer: TRUE Diff: 2
Topic: Tax Credit
AACSB: Analytical Thinking
Chapter 4 Tax Planning and Strategies 85
2) Standard deductions need yearlong record -keeping and thorough and accurate documentation.
Answer: FALSE Diff: 2
Topic: Deductible
AACSB: Analytical Thinking
3) The health care premium credit is available to low-income taxpayers who purchased coverage through the Health Insurance Marketplace.
Answer: TRUE Diff: 2
Topic: Tax Credit
AACSB: Analytical Thinking
4) The Lifetime Learning tax credit is designed to help all taxpayers get at least a two-year degree.
Answer: FALSE Diff: 3
Topic: Tax Credit
AACSB: Reflective Thinking
5) A personal exemption is an approved deduction that you can make on your tax return for each person supported by the income shown on your tax return.
Answer: TRUE Diff: 3
Topic: Deductions
AACSB: Information Technology
6) ________ income is from activities in which the taxpayer does not actively participate.
A) Active B) Portfolio C) Passive D) Investment
E) both C and D Answer: C
Diff: 2
Topic: Taxable Income AACSB: Analytical Thinking
7) A child tax credit reduces the federal income tax you owe by up to $1,000 for each qualifying child under the age of
A) 15. B) 17. C) 19. D) 21.
Answer: B Diff: 2
Topic: Tax Credit
AACSB: Analytical Thinking
86 Keown Personal Finance: Turning Money into Wealth, 7e
8) Your dependent is claimed as an approved exemption on ________ tax return.
A) your
B) his or her own
C) the return they choose themselves D) all of the above
E) none of the above Answer: A
Diff: 2
Topic: Deductions
AACSB: Analytical Thinking
9) Which of the following statements about portfolio income from investments that are not held in a tax-deferred account, is accurate?
A) It is also called investment income.
B) It is normally in the form of dividends and interest.
C) It must be reported on your tax return.
D) It may be taxed at a lower rate than wages and salaries are.
E) All of the above Answer: E
Diff: 3
Topic: Taxable Income
AACSB: Information Technology
10) Who must file a federal income tax return?
A) Everyone with an earned income during the year B) All heads of household
C) All American citizens
D) Individuals whose income meets federal guidelines E) Only those who have to file a state income tax return Answer: D
Diff: 3 Topic: Taxes
AACSB: Information Technology
11) Which of the following are permissible itemized tax deductions?
A) Medical and dental expenses B) Casualty and theft losses C) Home mortgage interest D) Gifts to charity
E) All of the above Answer: E
Diff: 2
Topic: Deductions
AACSB: Information Technology
Chapter 4 Tax Planning and Strategies 87
12) From the list below choose the item that is not a permissible tax deduction.
A) State, local, and real estate taxes
B) Home equity loan interest on debt up to $100,000 C) Auto, truck, or van loan interest
D) Interest on money borrowed to invest, within the IRS limits based on investment income E) Unreimbursed job-related expenses and tax preparation costs within the IRS limits Answer: C
Diff: 3
Topic: Deductions
AACSB: Information Technology
13) Which factors affect your choice between claiming itemized deductions and the standard deduction?
A) Home ownership, as mortgage interest may exceed the standard deduction
B) More deductible expenses this year than last year, as a result of unforeseen circumstances or planned ʺbunchingʺ of deductions
C) Ease and simplicity of filing
D) Year long recordkeeping to thoroughly and accurately document itemized deductions E) All of the above
Answer: E Diff: 3
Topic: Deductions
AACSB: Information Technology
14) Your base income tax liability can be determined by
A) using the alternative minimum tax worksheet, aimed at preventing the wealthy from paying little or no taxes.
B) using the IRS tax tables provided in the instruction booklet.
C) using the IRS rate schedules for taxable incomes greater than $100,000.
D) all of the above.
E) none of the above.
Answer: D Diff: 3
Topic: Taxable Income
AACSB: Information Technology
15) The earned income credit serves as a negative income tax and is available to A) anyone with an earned income as opposed to passive income.
B) low-income taxpayers.
C) only head of household status filers.
D) only senior citizens below the poverty line.
Answer: B Diff: 2
Topic: Tax Credit
AACSB: Information Technology
88 Keown Personal Finance: Turning Money into Wealth, 7e
16) Danielle is a divorced single parent who is currently paying back a college loan, attending graduate school part-time, and working full-time earning $42,000. She has custody and provides all support for her child. Which of the following adjustments, deductions, or credits might apply to her?
A) Adjustment for student loan interest B) Child tax credit
C) Child and dependent care credit D) Lifetime learning tax credit
E) All of the above Answer: E
Diff: 3
Topic: Deductions
AACSB: Analytical Thinking
17) You wish to make a charitable contribution of $2,000 to a qualified organization. You are currently in the 28 percent marginal tax bracket. By how much would this contribution lower your tax bill assuming your other itemized deductions exceed the standard deduction?
A) $280.00 B) $560.00 C) $1,440.00 D) $2,000.00
Answer: B Diff: 3
Topic: Deductions
AACSB: Analytical Thinking
18) You and your spouse have earned salary and wages of $41,750. In addition you have municipal bond interest income of $600 and savings account and certificate of deposit interest income of
$800. You paid a total of $600 in interest on your student loan. Using only this information, what is your adjusted gross income for tax purposes?
A) $43,150 B) $42,550 C) $42,350 D) $41,950
Answer: D Diff: 3
Topic: Adjusted Gross Income AACSB: Analytical Thinking
19) Income that comes from wages or a business is called
A) investment income. B) active income.
C) passive income. D) portfolio income.
Answer: B Diff: 1
Topic: Taxable Income
AACSB: Information Technology
20) Which of the following would offset your tax liability in a direct dollar for dollar manner and may actually increase your tax refund beyond the amount paid during the tax year?
A) Tax exemption B) Tax deduction
C) Tax credit D) Tax adjustment
Answer: C Diff: 1
Topic: Tax Credit
AACSB: Information Technology
Chapter 4 Tax Planning and Strategies 89
21) Leticia is a single person who makes $45,000 per year. This year she paid $2,000 in student loan interest, $1,500 in medical expenses, $7,200 in rent and $4,800 in car loan payments. She contributes $3,600 per year to her 401(k) plan at work. Give her some tax advice.
A) Single people should always take the standard deduction.
B) People who have medical expenses should always itemize their deductions.
C) Calculate your taxes using both methods to see which provides a greater deduction.
D) You should itemize if you pay interest, since interest of any kind is tax deductible.
Answer: C Diff: 3
Topic: Taxes Affect Personal Finance Decisions AACSB: Reflective Thinking
Karen and Jeffrey Bosteins
Karen and her husband, Jeffrey, are facing a new income tax situation this year. She is a corporate accountant and Jeffrey is an engineer. Their gross salaries total $89,000. Both graduated from four -year universities five years ago and are still paying off large student loans. She is now attending school part-time to prepare for the CPA exam. The Bosteins incurred considerable expenses in the process of adopting an infant this year, and they have the ongoing expense of daycare. In January of last year they closed on their new home.
Although trained as an accountant, Karenʹs work has not involved income tax preparation. Help them consider the following questions.
22) Which of the following credits would not apply to the Bosteins?
A) Adoption credit
B) Health care premium credit (childrenʹs version) C) Child and dependent care credit
D) Lifetime Learning tax credit Answer: B
Diff: 3
Topic: Tax Credit
AACSB: Analytical Thinking
23) Additional items that may reduce the Bosteinsʹ tax burden might include A) the child credit.
B) adjustment for the interest on their college loans.
C) earned income credit.
D) both A and B.
Answer: D Diff: 3
Topic: Tax Credit
AACSB: Analytical Thinking
90 Keown Personal Finance: Turning Money into Wealth, 7e
24) The Bosteins
A) have no dependents to declare.
B) should use the married filing separately filing status.
C) should calculate their taxes itemizing and taking the standard deduction to see which is greater.
D) none of the above.
Answer: C Diff: 3
Topic: Deductions
AACSB: Information Technology
25) With a growing family, Karen and Jeffrey know they should start investing more to provide for a secure future. Which of the following issues should they consider as they plan?
A) Interest paid on money borrowed to invest is an itemized deduction.
B) Contributions to tax-deferred retirement accounts avoid taxes in the current year and grow tax-free until the time of withdrawal.
C) Qualified dividends and capital gains are taxed at a lower rate than ordinary income.
D) Municipal bond earnings are exempt from federal income tax.
E) All of the above Answer: E
Diff: 3
Topic: Tax Planning AACSB: Reflective Thinking
26) Since their taxes are becoming more complex, Jeffrey and Karen are concerned about making a mistake or getting audited. They should
A) consult IRS Publication 17, Your Federal Income Tax, the IRS toll-free ʺhotline,ʺ or one of the self-help tax publications to learn more about their tax situation.
B) choose an independent tax specialist to prepare their taxes, because there is more
consistency in their training and the quality for their work than that of nationally affiliated specialists.
C) remember that the key to winning an audit is good records to verify the tax form information.
D) Only choices A and C.
E) All of the above choices.
Answer: D Diff: 3 Topic: Taxes
AACSB: Reflective Thinking
Chapter 4 Tax Planning and Strategies 91
Joseph Imamura
For many years Joseph paid someone else to file his income tax return. After taking a personal finance course at his local college, Joseph feels he is ready to tackle it on his own for tax year 2014. Joseph is single with an income of $43,000 and has no dependents. He has little interest income from savings, does not have a personal IRA, and plans to itemize deductions. Joseph owns a home and travels a lot with his job. He pays some of his own work-related expenses because his employer does not pay for all of them. His only personal investments include 1,500 shares of stock he inherited from his uncle, which he does not intend to sell for many years because the blue-chip company has a strong history of dividend income and share price appreciation. However, he does contribute monthly to his 401(k) plan at work.
27) To help Joseph with his tax planning, he should carefully track and maintain records for all of the following expenses during the tax year except
A) all expenses for prescribed health care needs that are not covered by insurance.
B) all job related expenses, especially those that are and are not reimbursed by his employer.
C) state and local income taxes, real estate taxes, and personal property taxes.
D) price appreciation, or increases from January 1 to December 31, for the 1,500 shares of stock he owns.
E) all of the above.
Answer: D Diff: 3
Topic: Capital Gains/Loss AACSB: Analytical Thinking
28) Which of the following tax planning strategies could Joseph consider to reduce his future tax bills?
A) Carefully track and maintain records for all itemized deduction categories to insure he is maximizing his itemized deductions.
B) Establish a home equity credit line to finance other consumer credit, such as an auto purchase.
C) Contribute as much as possible to a tax-deferred retirement account, such as his 401(k).
D) Invest in municipal bonds to receive tax-exempt income.
E) All of the above would be strategies available to Joseph to reduce his future taxes.
Answer: E Diff: 3 Topic: Taxes
AACSB: Analytical Thinking
29) Joseph can qualify for all of the following except the A) mortgage interest payments deduction.
B) deduction for unreimbursed job-related expenses that are in excess of 2 percent of AGI.
C) Lifetime Learning Credit.
D) real estate property taxes deduction.
E) Joseph can qualify for all of the above to reduce his tax liability.
Answer: C Diff: 3
Topic: Deductions
AACSB: Analytical Thinking
92 Keown Personal Finance: Turning Money into Wealth, 7e
Samuel Ahn
Samuel Ahn recently graduated from college and started working in a promising career field. He has a little money invested in a stock that pays no dividends. He lives in an apartment, is single, and has no dependents.
He has a $22,000 student loan balance and he paid $800 interest in 2014. He is considering going back to school part-time for some additional computer classes. He does not have a personal IRA, and he contributed 2 percent of his $39,500 salary to his employerʹs 401(k) plan in 2014. As he completes his tax return for 2014, use the information above and below to help him answer the following questions.
Standard deduction for 2014: $6,200 Personal exemption for 2014: $3,950
Tax brackets for 2014:
Taxable income range Tax rate
Up to $9,075 10 percent
More than $9,075 but under $36,900 15 percent More than $36,900 but under $89,350 25 percent
30) What is Samuelʹs gross income for 2014?
A) $35,250 B) $22,500
C) $39,500 D) Not enough information to determine
Answer: C Diff: 1 Topic: Taxes
AACSB: Analytical Thinking
31) What is Samuelʹs adjusted gross income for 2014?
A) $39,500 B) $32,500 C) $37,910 D) $38,700
Answer: C Diff: 2
Topic: Adjusted Gross Income AACSB: Analytical Thinking
32) What is Samuelʹs taxable income for 2014?
A) $38,700 B) $29,350 C) $33,300 D) $27,760
Answer: D Diff: 3
Topic: Taxable Income AACSB: Analytical Thinking
33) What is Samuelʹs total tax liability for 2014?
A) $5,351.25 B) $3,710.25 C) $4,541.25 D) $3,948.75
Answer: B Diff: 3
Topic: Marginal Tax Rate AACSB: Analytical Thinking
Chapter 4 Tax Planning and Strategies 93
34) What is Samuelʹs marginal tax rate for his current level of taxable income?
A) 10% B) 15% C) 12.5% D) 25%
Answer: B Diff: 1
Topic: Marginal Tax Rate AACSB: Analytical Thinking
35) Samuelʹs average tax rate for 2014 is closest to which of the following?
A) 10% B) 15% C) 12.5% D) 25%
Answer: A Diff: 3
Topic: Marginal Tax Rate AACSB: Analytical Thinking
36) Based on Samuelʹs completed tax return, what advice would you give him to lower his tax liability for 2015?
A) He should take the computer classes in 2015.
B) He should sell his stock.
C) He should increase his contributions to the 401(k) plan at work.
D) He should get a roommate and claim him as a dependant.
E) Both A and C are good advice.
Answer: E Diff: 3
Topic: Principle 4: Taxes affect personal finance decisions AACSB: Analytical Thinking
Richard and Katarina Bajorshik
Katarina and Richard are a busy young couple with a son, Caleb, who is 6 and twin daughters, Stacy and Casey, who are actively exploring the world as four-year-olds. Before the twins were born, Katarina and Richard bought their first home with plenty of indoor and outdoor space for a growing young family. The Bajorshiks are concerned about their 2014 tax issues, but they are also committed to planning for the future of their family. Next year Richard should be able to pay off the remaining balance of his law school student loans. Contributing to Richardʹs Roth IRA is an annual priority. The following information reflects tax year 2014.
Gross income $98,712
Student loan interest $1,965 Richardʹs traditional IRA $1,500 Total itemized deductions $12,000 Standard deduction for 2014 $12,400 Personal exemption amount $3,950
Marginal tax bracket 25%
37) What is the Bajorshiksʹ adjusted gross income?
A) $98,712 B) $97,212 C) $96,747 D) $95,247 E) $83,462
Answer: D Diff: 3
Topic: Adjusted Gross Income AACSB: Analytical Thinking
94 Keown Personal Finance: Turning Money into Wealth, 7e
38) Approximately how much will the Bajorshiks save in 2014 income tax payments as a result of Richardʹs student loan interest?
A) $1,965.00 B) $196.50 C) $491.25 D) $1,473.75 E) $0
Answer: C Diff: 3
Topic: Deductions
AACSB: Analytical Thinking
39) Richard and Katarinaʹs filing status should be A) head of household.
B) married filing jointly.
C) married filing separately.
D) single.
E) surviving spouse.
Answer: B Diff: 1 Topic: Taxes
AACSB: Information Technology
40) What is Richard and Katarinaʹs taxable income?
A) $63,097 B) $63,497 C) $79,297 D) $83,247 E) $98,712
Answer: A Diff: 3
Topic: Taxable Income AACSB: Analytical Thinking
41) Although Richard and Katarina are a happily married couple, they joke that they could not possibly remarry for at least two years following the year of the death of the other spouse because
A) the surviving spouse would lose the tax advantage of married filing jointly status, assuming at least one child was still a dependent and the surviving spouse was paying more than half the cost of keeping up the home.
B) the surviving spouse would lose the exemption amount for the deceased spouse.
C) the surviving spouse would have to file as head of household.
D) neither spouse has sufficient life insurance to provide for the family.
Answer: A Diff: 3 Topic: Taxes
AACSB: Reflective Thinking
42) If the Bajorshiksʹ income does not exceed the phase-out level of $110,000 in 2014, by how much will the child tax credit reduce their tax liability?
A) Their tax liability will be reduced by $750.
B) Their tax liability will be reduced by $2,000.
C) Their tax liability will be reduced by $2,100.
D) Their tax liability will be reduced by $3,000.
Answer: D Diff: 2
Topic: Tax Credit
AACSB: Analytical Thinking
Chapter 4 Tax Planning and Strategies 95
43) Katarina worked as an ER nurse, and knows that demand for the job is high. However, prior to returning to work, when the twins enter kindergarten, she will need to take classes on the latest technological advancements. Which of the following tax planning strategies should the
Bajorshiks consider as they plan their financial future?
A) When Katrina returns to school, they should track school-related expenses and determine eligibility for the Lifetime Learning credit.
B) While the children are under age 13, the Bajorshiks should track childcare expenses and determine eligibility for the child and dependent care credit.
C) Both A and B are legitimate tax planning strategies that the couple should consider.
D) Neither A nor B is a tax planning strategy that is relevant to this coupleʹs situation.
Answer: C Diff: 3
Topic: Tax Planning AACSB: Analytical Thinking
44) Name and describe the four general categories that reduce your taxable income, therefore reducing your tax liability.
Answer: Adjustments to income allow certain legal reductions in gross income. Examples include IRA contributions, moving expenses, self-employment tax and retirement plans, and alimony payments. Itemized deductions consist of medical and dental expenses, state, local, and real estate taxes, home mortgage and investment interest payments, gifts to charity, theft and casualty losses, and miscellaneous deductions. As an alternative to itemizing deductions, the standard deduction may be used. Personal and dependency exemptions serve to further reduce taxable income. Finally, credits are subtracted directly from the tax liability, and while most credits are non-refundable, a few, such as the earned income credit allow for a refund in excess of taxes paid. Examples of credits include child and dependent care expenses, hope scholarship credit, lifetime learning credit, child credit, the earned income credit., adoption credit, and the health care
premium credit. Note that the standard deduction amount and the exemption amount are adjusted upward annually in response to inflation.
Diff: 2
Topic: Taxable Income AACSB: Reflective Thinking
45) Explain how to calculate your taxable income, and how to determine the need for a tax payment or refund.
Answer: First, calculate total gross income by adding income from all taxable sources. Next, subtract all adjustments, deductions (the itemized or standard amount), and exemptions to calculate taxable income. On the basis of your taxable income, use the tax tables or tax rate to determine your tax liability and then apply any tax credits that may apply. If the amount of your tax liability is greater than the taxes withheld from you, then you owe the IRS a tax payment for the difference. If the tax liability is smaller than what was already withheld, then you are due a tax refund.
Diff: 2
Topic: Taxable Income AACSB: Reflective Thinking
96 Keown Personal Finance: Turning Money into Wealth, 7e
46) Name the sources of tax-free income.
Answer: These sources include interest on municipal bonds, tax-free money market funds, gifts, child support payments, welfare benefits, workersʹ compensation benefits, veteransʹ benefits, federal income tax refunds, certain Social Security benefits, interest earned inside a life insurance policy, earnings on an IRA, and inheritances.
Diff: 1
Topic: Taxable Income
AACSB: Information Technology
47) Explain the concept of using the standard deduction or using itemized deductions.
47) Explain the concept of using the standard deduction or using itemized deductions.