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Personal Finance: Tax Planning and Strategies
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The basic methods of tax planning are: reducing your overall income, increasing your number of tax deductions throughout the year, and taking advantage of certain tax credits.
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Personal Finance: Tax Planning and Strategies
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25 Questions

1. The health care premium credit is available to low-income taxpayers who purchased coverage through the Health Insurance Marketplace.
2. Taxes are collected on a pay-as-you-go basis.
3. Income on which the payment of taxes is postponed until some future date is called
4. If you are in a 25 percent tax bracket then every dollar of your adjusted gross income will be taxed at 25 percent.
5. Wilma Rudolph was given a cost of living raise and a merit raise at work this year- Her federal income taxes will be paid at 25% instead of 15%- Wilma has experienced
6. ________ income is from activities in which the taxpayer does not actively participate.
7. The impact of taxes are an important consideration in most of the financial decisions that you will make.
8. For 2014, the federal tax code allows an estate valued at up to $5.34 million to be transferred tax free to any heir- If the estate is valued at more than $5.34 million, the amount over $5.34 million will be taxed at
9. If you are self-employed, you have to pay both the employer and employee portions of FICA, for a total rate of 20 percent.
10. A regressive tax rate is one that increases as you make more income.
11. A key to calculating your taxes is deciding which Form 1050 to use: 1050EZ, 1050A, or 1050.
12. The deadline to file your income tax return is ________ although an automatic extension may be filed.
13. According to the Tax Policy Center, approximately ________ of American households did not pay any federal income taxes in the 2013 tax year.
14. Which of the statements about audits is false?
15. Understanding how tax planning affects your personal finances is actually important for most taxpayers, not just the wealthy, because
16. Chase Cutter has a marginal tax rate of 33 percent, a state income tax rate of 3.5 percent, and a city income tax rate of 0.5 percent- The tax for Social Security and Medicare is 7.65 percent- What would be the effective marginal tax rate on your last dollar of earnings?
17. The percentage of the last dollar you earn that goes toward your taxes is your
18. 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.
19. Deductions calculated using the federal tax form 'Schedule A' which are totaled and then subtracted from taxable income are called
20. From the list below choose the item that is not a permissible tax deduction.
21. Craig Ripley sold his stock in Gandy Corporation for a price less than what he paid for it- Craig will experience
22. Social Security is a voluntary insurance program administered by the federal government that provides for you and your family in the event of death, disability, health problems, or retirement.
23. If you're in the 25% marginal tax bracket, what is the equivalent taxable yield on an 10% municipal bond?
24. An IRS-allowed reduction in your income for yourself, your spouse, and any dependents that is subtracted before you compute your taxes is called a(n)
25. Claire currently makes $30,000 per year and is in a 15% tax bracket- If she contributes $1,800 to her 401(k) plan at work, by how much will this lower her tax liability?

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