Question 1

Which of the following best describes 'gross income' as used in federal income tax calculations?

Accepted Answer

The total income for the year, including wages, interest, dividends, and winnings, before any deductions or adjustments.

Question 2

Which of the following is NOT included in gross income?

Accepted Answer

Charitable contributions

Question 3

Adjusted gross income (AGI) is calculated by:

Accepted Answer

Subtracting allowable adjustments from gross income

Question 4

Which of the following is an example of an allowable adjustment when calculating AGI?

Accepted Answer

Contributions to a traditional tax-deferred retirement plan

Question 5

A taxpayer has an adjusted gross income of $$50,000 and itemized deductions totaling 14$$,000. The standard deduction is $12,550. What is the taxpayer’s taxable income?

Accepted Answer

$36,000

Question 6

Which of the following best describes the purpose of FICA taxes?

Accepted Answer

To fund Social Security and Medicare benefits

Question 7

If you earn $$180,000 and are not self-employed, how much FICA tax do you owe? (FICA tax rates: 7.65% on the first 142$$,800, 1.45% on income above $142,800)

Accepted Answer

$12,324

Question 8

A student works 20 hours per week at $15 per hour. The employer withholds 10% for federal taxes, 7.65% for FICA, and 3% for state taxes. What is the student’s weekly net pay?

Accepted Answer

$236.55

Question 9

Which of the following is a scenario where itemizing deductions would be more beneficial than taking the standard deduction?

Accepted Answer

When the total of itemized deductions exceeds the standard deduction

Question 10

A single taxpayer has a gross income of $$67,000, adjustments of 9$$,000, and itemized deductions totaling $16,150. What is their taxable income?

Accepted Answer

$41,850

Question 11

Which of the following is NOT an itemized deduction?

Accepted Answer

Interest paid on student loans

Question 12

A taxpayer’s taxable income is $$50,000. Using the 2021 marginal tax rates for a single filer (10% on first 9$$,950, 12% on $$9,951–40$$,525, 22% on $$40,526–86$$,375), what is their total federal income tax owed?

Accepted Answer

$6,748.50

Question 13

Which filing status applies to someone who is unmarried and pays more than half the cost of supporting a child?

Accepted Answer

Head of Household

Question 14

If a taxpayer is married and both partners file a single tax return together, what is their filing status?

Accepted Answer

Married Filing Jointly

Question 15

A taxpayer’s gross income is $$63,500 (wages), 1$$,850 (interest), and $$15,000 (game-show winnings). They contribute 7$$,800 to a tax-deferred savings plan. What is their adjusted gross income?

Accepted Answer

$72,550

Question 16

Which of the following best describes a 'standard deduction'?

Accepted Answer

A lump-sum amount set by the IRS that can be subtracted from adjusted gross income

Question 17

A working student earns $300 per week. If 10% is withheld for federal taxes, 7.65% for FICA, and 3% for state taxes, what percentage of gross pay is withheld for taxes? (Round to the nearest tenth of a percent.)

Accepted Answer

20.7%

Question 18

Which of the following is a real-life example of an adjustment to income?

Accepted Answer

Interest paid on student loans

Question 19

A taxpayer’s itemized deductions are $$10,000, but the standard deduction is 12$$,550. What should the taxpayer do?

Accepted Answer

Take the standard deduction

Question 20

Which of the following is NOT a purpose of income tax collected by the government?

Accepted Answer

To fund Social Security and Medicare (FICA taxes)

Income Tax and Personal Finance: Liberal Arts Math Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards