Tax Exam 2 Questions And Answers
With Verified Solutions 100% Correct!!!
True or false: The term tax bracket refers to the average tax rate that is applied to
an individual's taxable income. - ANSWER✔✔ FALSE
There are four different tax rate schedules. The rate schedule used by an individual
is determined by his or her - ANSWER✔✔ Filing status
When a married couple's tax liability is smaller using the married filing jointly
status than it would have been if both individuals were unmarried and filed as
single, the difference in the tax liability is called a(n) - ANSWER✔✔ marriage
benefit
Which of the following types of income may be taxed at rates higher than the tax
rate schedule would dictate? - ANSWER✔✔ unearned income when the taxpayer
is a dependent child
Darcy received $2,000 in qualified dividends this year and has ordinary income of
$20,000. Assuming Darcy has no other taxable income, the tax rate will be
assessed on the $2,000 dividend is - ANSWER✔✔ 0%
Each separate range of income subject to a different tax rate is referred to as a(n) -
ANSWER✔✔ tax bracket
When calculating a tax liability, the taxpayer will use the tax rate schedule that is
determined by which of the following? - ANSWER✔✔ Filing status
,Alex and Alecia used the married filing jointly filing status when they prepared
their tax return. During the current year, their joint tax liability totaled $9,300. If
they were not married and had both filed as single, Alex would have had a $3,900
tax liability, and Alecia would have had a $5,000 tax liability. What is the term
used for the $400 difference in their tax liability? - ANSWER✔✔ marriage penalty
Which of the following taxpayers can use the tax rate schedule to calculate the tax
on all of his or her taxable income without having to perform additional
calculations to determine the tax on varying types of income? - ANSWER✔✔
Harold received income from a partnership where he works full-time and interest
from corporate bonds.
Christina's taxable income is $35,000. Charlie's is $50,000, and Chris' is $500,000.
Each of these taxpayers additionally earned $1,000 of long term capital gain
income in 2022. All of the taxpayers file as single. Which of the following -
ANSWER✔✔ Chris will pay $200 in tax
During the current year, Barry (single taxpayer) has taxable income of $60,000. Of
that amount, $10,000 is long-term capital gain. How will Barry calculate the tax on
his income? - ANSWER✔✔ Use the tax rate schedule to calculate tax on $50,000;
multiply the capital gain income of $10,000 by 15%; then add the two amounts
together.
Which of the following individuals would not be subject to the kiddie tax assuming
they have unearned income. - ANSWER✔✔ A child who is 19 at year end, a part-
time student, and claimed as a dependent on his parents' tax return.
Chris has taxable income of $123,000. A portion of this income is from capital
gains and should receive preferential tax treatment. List the steps below in the
order in which they should occur for Chris to be able to determine his overall tax
, liability. - ANSWER✔✔ Step 1: Split taxable income into the portion taxed at
preferential rates versus the portion taxed at ordinary rates.
Step 2: Choice
Compute the tax separately on each type of income, using the tax rate schedule on
the portion taxed at ordinary rates.
Step 3: Choice
Add the tax on the income subject to preferential rates to the tax on the income
subject to ordinary rates.
The purpose of the "kiddie tax" is to prevent parents from shifting _______ income
to their dependent children who may be subject to a lower tax rate - ANSWER✔✔
unearned
Which of the following individuals would NOT be subject to the kiddie tax? -
ANSWER✔✔ Shelby is a 17 year old, full-time student who does NOT provide
half of her own support. She has $3,000 in babysitting income. (BECAUSE SHE
HERSELF EARNED INCOME)
Which one of the following types of income is NOT part of net investment income
for purposes of calculating the Net Investment Income tax? - ANSWER✔✔
Veteran's benefits
For certain taxpayers, a tax of ______% may be assessed on net investment income
- ANSWER✔✔ 3.8
The ____________ ____________ tax is intended to provide basic pension
coverage for the retired and disabled, and the _______________ tax helps pay
medical costs for qualifiers. - ANSWER✔✔ social security, medicare
With Verified Solutions 100% Correct!!!
True or false: The term tax bracket refers to the average tax rate that is applied to
an individual's taxable income. - ANSWER✔✔ FALSE
There are four different tax rate schedules. The rate schedule used by an individual
is determined by his or her - ANSWER✔✔ Filing status
When a married couple's tax liability is smaller using the married filing jointly
status than it would have been if both individuals were unmarried and filed as
single, the difference in the tax liability is called a(n) - ANSWER✔✔ marriage
benefit
Which of the following types of income may be taxed at rates higher than the tax
rate schedule would dictate? - ANSWER✔✔ unearned income when the taxpayer
is a dependent child
Darcy received $2,000 in qualified dividends this year and has ordinary income of
$20,000. Assuming Darcy has no other taxable income, the tax rate will be
assessed on the $2,000 dividend is - ANSWER✔✔ 0%
Each separate range of income subject to a different tax rate is referred to as a(n) -
ANSWER✔✔ tax bracket
When calculating a tax liability, the taxpayer will use the tax rate schedule that is
determined by which of the following? - ANSWER✔✔ Filing status
,Alex and Alecia used the married filing jointly filing status when they prepared
their tax return. During the current year, their joint tax liability totaled $9,300. If
they were not married and had both filed as single, Alex would have had a $3,900
tax liability, and Alecia would have had a $5,000 tax liability. What is the term
used for the $400 difference in their tax liability? - ANSWER✔✔ marriage penalty
Which of the following taxpayers can use the tax rate schedule to calculate the tax
on all of his or her taxable income without having to perform additional
calculations to determine the tax on varying types of income? - ANSWER✔✔
Harold received income from a partnership where he works full-time and interest
from corporate bonds.
Christina's taxable income is $35,000. Charlie's is $50,000, and Chris' is $500,000.
Each of these taxpayers additionally earned $1,000 of long term capital gain
income in 2022. All of the taxpayers file as single. Which of the following -
ANSWER✔✔ Chris will pay $200 in tax
During the current year, Barry (single taxpayer) has taxable income of $60,000. Of
that amount, $10,000 is long-term capital gain. How will Barry calculate the tax on
his income? - ANSWER✔✔ Use the tax rate schedule to calculate tax on $50,000;
multiply the capital gain income of $10,000 by 15%; then add the two amounts
together.
Which of the following individuals would not be subject to the kiddie tax assuming
they have unearned income. - ANSWER✔✔ A child who is 19 at year end, a part-
time student, and claimed as a dependent on his parents' tax return.
Chris has taxable income of $123,000. A portion of this income is from capital
gains and should receive preferential tax treatment. List the steps below in the
order in which they should occur for Chris to be able to determine his overall tax
, liability. - ANSWER✔✔ Step 1: Split taxable income into the portion taxed at
preferential rates versus the portion taxed at ordinary rates.
Step 2: Choice
Compute the tax separately on each type of income, using the tax rate schedule on
the portion taxed at ordinary rates.
Step 3: Choice
Add the tax on the income subject to preferential rates to the tax on the income
subject to ordinary rates.
The purpose of the "kiddie tax" is to prevent parents from shifting _______ income
to their dependent children who may be subject to a lower tax rate - ANSWER✔✔
unearned
Which of the following individuals would NOT be subject to the kiddie tax? -
ANSWER✔✔ Shelby is a 17 year old, full-time student who does NOT provide
half of her own support. She has $3,000 in babysitting income. (BECAUSE SHE
HERSELF EARNED INCOME)
Which one of the following types of income is NOT part of net investment income
for purposes of calculating the Net Investment Income tax? - ANSWER✔✔
Veteran's benefits
For certain taxpayers, a tax of ______% may be assessed on net investment income
- ANSWER✔✔ 3.8
The ____________ ____________ tax is intended to provide basic pension
coverage for the retired and disabled, and the _______________ tax helps pay
medical costs for qualifiers. - ANSWER✔✔ social security, medicare
