3 _Taxable income is the total earnings of a

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					Quiz 3 09/22/09 Name ________________________             (Please print your name neatly!)

1 Which form would an individual use who is married and does not itemize deductions but has
adjustments to income? (c)
A. Form 1040
B. Form 1040EZ
C. Form 1040A
D. Schedule A

2 ______ Gift amounts over $12,000 are exempt from federal tax. (false)

3 ______Taxable income is the total earnings of a person. (false)

4 Maryellen Epplin worked in Poland for part of the year and earned $50,000 while she was
there. This income will not be included in her income for the year. This represents: (b)
A. A deduction
B. An exclusion
C. An exemption
D. A tax credit
E. A refund


5 Interest earnings of $1,600 from a taxable investment for a person in a 28 percent tax bracket
would result in after-tax earnings of (b)
A. $1,600
B. $1,152
C. $1,100
D. $448
E. $152

6 A person has $4,000 in medical expenses and an adjusted gross income of $32,000. If
taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of
adjusted gross income, what would be the amount of the deduction in this situation? (b)
A. $300
B. $1,600
C. $2,400
D. $4,000
E. $32,000
7 Which of the following is a retirement plan sponsored by an employer? (d)
A. Roth IRA
B. Education IRA
C. Keogh Account
D. 401(k) Plan
E. SEP

8 Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent
who wants to verify the office expenses Elaine claims are valid. What type of IRS audit is
this? (c)
A. A correspondence audit
B. An office audit
C. A field audit
D. A detailed audit
E. A research audit

9 _____________ are expenses that a taxpayer is allowed to deduct from adjusted gross
income. (c)
A. Exemptions
B. Exclusions
C. Itemized deductions
D. Tax credits
E. Passive income

10 A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes
by: (d)
A. $10.
B. $28.
C. $14.
D. $50.
E. $35.

 

				
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