TAX 4001 EXAM REVIEW QUESTIONS & ANSWERS
1. When is an individual required to file a tax return?
Individuals must file a tax return when their gross income exceeds certain
amounts based on their filing status and age.
Individuals must file a tax return when they have income tax withheld from
their wages.
All individuals must file an income tax return when they reach the required
age.
Individuals must file a tax return when they are no longer claimed as depen-
dents.: Individuals must file a tax return when their gross income exceeds certain amounts based on their filing
status and age.
2. Which of the following expenses qualify for the American Opportunity Cred-
it?
Textbo
oks
Tuition
Requir
ed fees
Meal
plans
Parking
fees
Housing:
Textboo
ks
,Tuition
Required fees
3. The term tax bracket refers to the average tax rate that is applied to
an individual's taxable income.
T
r
u
e
F
a
l
s
e
:
F
a
l
s
e
Reason:
Each separate range of income subject to a ditterent tax rate is a tax bracket.
4. When calculating a tax liability, the taxpayer will use the tax rate schedule that
is determined by which of the following?
,Level of income
Number of
dependents
Age
Filing status: Filing Status
5. 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): Marriage benefit
6. Which of the following types of income may be taxed at rates lower than the
tax rate schedule would dictate?
Rental income from property the taxpayer
owns. Long-term capital gain income
Qualified dividend income
Unearned income when the taxpayer is a dependent child: -Long-term capital gain
income
-Qualified dividend income
7. 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 2023. All of the taxpayers file as single. Which of the
following answers is correct regarding the amount of tax liability assessed on
the capital gain?
Charlie will pay $280 in
tax. Chris will pay $100.
Chris will pay $200 in tax.
Each of the taxpayers will pay $150 in tax.: Chris will pay $200 in tax.
, Reason:
Charlie will only pay 15%, which is the rate that applies to taxable income between $44,625 and $492,300. Since Chris'
taxable income is over $492,300, the preferential capital gains rate is 20%
8. Each separate range of income subject to a different tax rate is referred to as
a(n): Tax Bracket
1. When is an individual required to file a tax return?
Individuals must file a tax return when their gross income exceeds certain
amounts based on their filing status and age.
Individuals must file a tax return when they have income tax withheld from
their wages.
All individuals must file an income tax return when they reach the required
age.
Individuals must file a tax return when they are no longer claimed as depen-
dents.: Individuals must file a tax return when their gross income exceeds certain amounts based on their filing
status and age.
2. Which of the following expenses qualify for the American Opportunity Cred-
it?
Textbo
oks
Tuition
Requir
ed fees
Meal
plans
Parking
fees
Housing:
Textboo
ks
,Tuition
Required fees
3. The term tax bracket refers to the average tax rate that is applied to
an individual's taxable income.
T
r
u
e
F
a
l
s
e
:
F
a
l
s
e
Reason:
Each separate range of income subject to a ditterent tax rate is a tax bracket.
4. When calculating a tax liability, the taxpayer will use the tax rate schedule that
is determined by which of the following?
,Level of income
Number of
dependents
Age
Filing status: Filing Status
5. 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): Marriage benefit
6. Which of the following types of income may be taxed at rates lower than the
tax rate schedule would dictate?
Rental income from property the taxpayer
owns. Long-term capital gain income
Qualified dividend income
Unearned income when the taxpayer is a dependent child: -Long-term capital gain
income
-Qualified dividend income
7. 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 2023. All of the taxpayers file as single. Which of the
following answers is correct regarding the amount of tax liability assessed on
the capital gain?
Charlie will pay $280 in
tax. Chris will pay $100.
Chris will pay $200 in tax.
Each of the taxpayers will pay $150 in tax.: Chris will pay $200 in tax.
, Reason:
Charlie will only pay 15%, which is the rate that applies to taxable income between $44,625 and $492,300. Since Chris'
taxable income is over $492,300, the preferential capital gains rate is 20%
8. Each separate range of income subject to a different tax rate is referred to as
a(n): Tax Bracket
