Basics Beginner: The Basics of Tax Planning

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1.
When planning your investments, it is important to recognize that ______.
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There are many sound assets that will increase your wealth over the long haul but which produce little or no current income. Examples include raw land or good growth stocks.
2.
A _______ is one kind of contribution that can help save you money on your taxes.
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Flexible spending account. A flexible spending account is one kind of contribution you can make that can help save you money on your taxes.
3.
Contributions a business owner makes to his or her own 401(k) are deductible by the business.
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True. Contributions a business owner makes to all employees' 401(k) accounts are generally deductible by the business.
4.
The kiddie tax is a term that applies to what type of income?
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Unearned income received by people under a certain age. The kiddie tax applies to investment income and other types of unearned income.
5.
How does a contribution to a traditional IRA provide income tax savings?
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Within limits, the contribution is deducted from your taxable income. An IRA contribution is an adjustment to income and thereby provides significant tax savings.