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Exam 4: Managing Income Taxes

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Question 31

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The key to reducing one's tax liability is to reduce taxable income rather than gross income.

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Question 32

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To qualify for the earned income credit,taxpayers must have earned income.

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Question 33

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A tax credit of up to ____ is available for qualifying costs of an adoption.

Tax avoidance is illegal whereas tax evasion is legal.

Seeking legal ways to reduce,eliminate or defer income taxes is called​

Adjusted gross income is not a factor in calculating which of the following itemized deductions?

Figure 4-1 Tony and Liz Montey both work for XYZ Corporation where Tony earns $32,000 and Liz earns $31,000.However,XYZ Corporation does not have a retirement plan for their employees.Tony and Liz have three-year old twin daughters named Trisha and Tasha.The following is information related to their taxes for the current tax year: ​ -Refer to Figure 4-1.How much more will Tony and Liz save in taxes by itemizing deductions rather than by taking the standard deduction?

All income other than capital gains is referred to as

A taxpayer with a taxable income greater than $100,000 must use the tax-rate schedules rather than the tax tables to find his or her tax liability.

The money you receive back because you have overpaid your taxes is called a tax return.

Practically everything you receive in return for your work or services and any profit from the sale of assets is considered income,whether the compensation is paid in cash,property,or services.Listing these earnings will reveal your

An extra benefit of a defined-contribution retirement plan is that most employers offer full or partial ____ to employees accounts.

A tax that requires a higher-income person to pay a higher percentage of his or her income in taxes is called a ____ tax.

The rule for tax-related records is,"When in doubt,throw it out."

All of the income received from Social Security benefits must be reported as gross income on your federal income tax return.

Figure 4-1 Tony and Liz Montey both work for XYZ Corporation where Tony earns $32,000 and Liz earns $31,000.However,XYZ Corporation does not have a retirement plan for their employees.Tony and Liz have three-year old twin daughters named Trisha and Tasha.The following is information related to their taxes for the current tax year: ​ -Refer to Figure 4-1.If Tony and Liz owe $3,296 in taxes on their taxable income what is their final tax liability after taking the credits for which they qualify?

Sal is a 27-year-old single taxpayer in the 28 percent marginal tax bracket.Assuming Sal's standard deduction is $5,800 and she has itemized deductions totaling $6,500,Sal should take the ____ for the additional tax savings of ____.

A progressive tax is one that demands a higher percentage of a person's income as income increases.

You may claim both the American Opportunity credit and the lifetime learning credit for the same year.

The full market value of any lost property can be deducted as a casualty or theft loss when the loss results from a sudden,unexpected,or unusual event.