Business and Personal Finance © 2007

Chapter 12: Planning Your Tax Strategy

Practice Tests

1
The total amount of taxes owed is called _______.
A)exemption
B)tax liability
C)income tax
D)tax credit
2
A(n) _______ is a state tax collected on the property left by a person to his or her heir(s) in a will.
A)inheritance tax
B)estate tax
C)gift tax
D)income tax
3
A(n) _______ is a federal tax collected on the value of a person's property at the time of his or her death.
A)gift tax
B)estate tax
C)inheritance tax
D)excise tax
4
_______ is the money you receive for working, including wages, salary, commissions, fees, tips, bonuses, and self-employed earnings.
A)interest income
B)tax liability
C)dividend income
D)earned income
5
Income that is not subject to taxes is called a(n) _______.
A)tax deduction
B)itemized deduction
C)exclusion
D)tax liability
6
A(n) _______ is an expense you can subtract from your adjusted gross income to figure your taxable income.
A)tax deduction
B)exemption
C)exclusion
D)adjusted gross income
7
A(n) _______ is a deduction from adjusted gross income for the taxpayer, the spouse, and qualified dependents.
A)exemption
B)exclusion
C)tax deduction
D)tax liability
8
A(n) _______ is a form, such as 1040 or 1040EZ, on which a taxpayer reports how much money he or she received from work and other sources and the exact taxes that are owed.
A)W-2 form
B)extension
C)income tax return
D)dividend form
9
Earnings on a traditional IRA are _______.
A)tax-exempt
B)an exclusion
C)earned income
D)tax-deferred
10
If you deduct medical expenses, you must use _______.
A)Form 1040EZ
B)a W-2 form
C)Form 1040A
D)Form 1040
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